UK Households Under £50,270 Urged to Claim HMRC Marriage Tax Allowance Worth £252
UK households with incomes below £50,270 are being strongly advised to take advantage of a valuable HMRC perk known as the marriage tax allowance, which can reduce tax bills by up to £252 each year. This often-overlooked benefit allows individuals to transfer a portion of their personal tax-free allowance to their spouse or civil partner, providing significant financial relief for eligible couples.
How the Marriage Tax Allowance Works
The marriage tax allowance enables a person with a lower income to transfer their unused personal tax allowance to their husband, wife, or civil partner. Specifically, the lower earner can transfer up to £1,260 of their personal allowance to the higher earner. This transfer increases the higher earner's tax-free allowance to a maximum of £13,830, resulting in reduced tax payments on their income.
If the maximum amount is transferred, it translates into a tax saving of £252 annually. However, it is important to note that couples where either partner has an income exceeding £50,270 are not eligible for this perk, making it targeted at middle and lower-income households.
Eligibility Criteria for Claiming the Allowance
To benefit from the marriage allowance, couples must meet specific criteria:
- You must be married or in a civil partnership.
- One partner does not pay Income Tax or has an income below the Personal Allowance, which is typically £12,570.
- The other partner pays Income Tax at the basic rate, meaning their income falls between £12,571 and £50,270 before receiving the allowance.
Additionally, claims can be backdated to include any tax year since April 5, 2020, provided the couple was eligible during those periods. The tax reduction will be calculated based on the rates applicable in the backdated years.
Important Considerations and Automatic Renewal
HMRC highlights that the personal allowance transfer occurs automatically each year once the marriage allowance is claimed, continuing until the claimant cancels it. It is crucial to cancel the allowance if circumstances change, such as an increase in income or the end of the relationship, to avoid potential issues.
For couples where one partner was born before April 6, 1935, the Married Couple’s Allowance might offer greater benefits and should be considered as an alternative. This ensures that all eligible households can maximize their tax savings effectively.
By raising awareness of this perk, HMRC aims to help UK households reduce their financial burden, emphasizing the importance of checking eligibility and claiming promptly to secure annual savings of up to £252.
