Thousands of state pensioners across the UK are being urged to check their eligibility for a valuable tax perk that could reduce their annual bill by up to £252.
What is the Marriage Allowance?
The Marriage Allowance enables individuals who do not pay income tax to transfer £1,260 of their Personal Allowance to their spouse or civil partner, provided the recipient is a basic rate taxpayer.
This transfer effectively increases the receiving partner's tax-free allowance, thereby reducing the amount of income tax they are required to pay. The current personal allowance stands at £12,570 for individuals earning under £100,000 annually.
Who qualifies for this tax relief?
To benefit from this scheme, the person transferring their allowance must have an income below the personal allowance, making them a non-taxpayer. The receiving partner must have an income between £12,571 and £50,270, placing them in the basic rate tax band of 20%.
Couples where either partner has an income exceeding £50,270 are not eligible for the Marriage Allowance.
This situation is particularly common among retired couples where one partner receives the full State Pension of £10,636.60 and does not use their entire personal allowance, while the other has a pension or other income that makes them a basic rate taxpayer.
How much can you save?
The financial benefit is significant. Transferring the £1,260 allowance to a basic rate taxpayer provides a tax reduction of £252 each year.
Furthermore, claims can be backdated by up to four years if the eligibility criteria were met during that period, potentially resulting in a total rebate of over £1,000 for some couples.
For assistance with claiming the allowance or reporting a change in circumstances, individuals can contact the dedicated helpline on 0300 200 3300.
