Thousands of UK households could be missing out on a significant tax break that effectively boosts the standard Personal Allowance for one partner by £1,260. HM Revenue and Customs (HMRC) has confirmed that eligible couples can claim the Marriage Allowance, a move that can increase an individual's tax-free income threshold from £12,570 to £13,830 for the tax year.
How the Marriage Allowance Works
The scheme is designed for married couples and civil partners where one person earns less than the standard Personal Allowance of £12,570, and the other is a basic-rate taxpayer. The lower-earning partner can transfer £1,260 of their unused tax-free allowance to their spouse or partner.
This transfer acts as a 'tax reducer' for the recipient, directly cutting their annual tax bill. It is crucial to note that the claim must be initiated by the partner who is giving up part of their allowance, not the one receiving it.
Substantial Savings and Backdated Claims
The financial benefit is clear-cut. For the current tax year, the transfer saves the couple £252. However, the potential windfall is often much larger because claims can be backdated for up to four previous tax years.
Using the example provided by tax experts: if a stay-at-home parent, Sarah, transfers part of her allowance to her working partner, James, who earns £40,000, they save £252 this year. If they have never claimed before, they can also receive a lump sum refund of £1,008 for the past four years (£252 x 4). This results in a total gain of £1,260.
Why Are So Many People Missing Out?
Despite the clear benefit, awareness of the Marriage Allowance remains surprisingly low. The rules also exclude some couples, which may contribute to its lower profile.
You cannot claim if either partner is a higher-rate taxpayer (earning above £50,270) or if both partners have individual incomes exceeding the £12,570 Personal Allowance threshold. For those who do meet the criteria, applying is straightforward. Once approved, HMRC will adjust the recipient's tax code automatically to reflect the higher £13,830 allowance for the year.
Experts urge all eligible couples to check their status and apply, highlighting that this is a legitimate tax relief that is often overlooked, potentially putting hundreds of pounds back into family budgets.
