Martin Lewis has issued a stark warning about a little-known HMRC rule that prevents couples from claiming the marriage tax allowance if the higher-earning partner exceeds the high-rate tax threshold by even a single pound. The allowance can boost a married couple's combined personal tax allowance to £13,830, but a strict eligibility condition means many are locked out.
What is the Marriage Tax Allowance?
The marriage tax allowance allows a non-taxpaying spouse or civil partner to transfer 10% of their personal allowance to their partner who pays the basic 20% income tax rate. This effectively gives the basic-rate taxpayer an additional £1,250 tax-free earnings, saving around £250 per year. Couples can backdate claims for up to four years, potentially receiving a lump sum of £1,000.
The £1 Rule That Blocks High-Rate Taxpayers
During a recent episode of his BBC podcast, Martin Lewis spoke with a listener who identified himself as a high-rate taxpayer with two children, one severely disabled. The listener asked whether claiming the marriage tax allowance would require him to complete an annual self-assessment tax return, expressing concern about the administrative burden given his son's high care needs.
Lewis responded: “Really interesting - let me deal with the second issue first, the marriage tax allowance. I’m afraid it isn’t going to be an issue for you. You cannot claim married tax allowance. The marriage tax allowance is for non taxpayers, which is your wife, married to a basic rate taxpayer which isn’t you. You’re a high rate taxpayer. If you go over the high-rate tax threshold even by a pound, you can no longer do the marriage tax allowance.”
A Potential Workaround: Pension Contributions
Lewis suggested a strategy for those just above the threshold: “Which is why it would be worth increasing your pension by £1 in that situation so that you would no longer be a high rate taxpayer and then you would still be able to claim the marriage tax allowance.” By reducing taxable income through pension contributions, a higher-rate taxpayer could drop into the basic-rate band and qualify for the transfer.
The marriage tax allowance is available only to married couples or those in civil partnerships, not cohabiting partners. The non-taxpaying partner must have an income below their personal allowance (currently £12,570) to be eligible to transfer the allowance.
Backdated Claims and Typical Savings
Lewis highlighted that eligible couples could backdate claims for up to four years. “So if you are listening and you are in a relationship where one of you is a non taxpayer and if you two are married or in a civil partnership, not just cohabiting, then you are entitled to use the marriage tax allowance. If you’ve been entitled to it for four years previously, you could be entitled to £1,250 and get a backdated payment of £1,000 as part of that.”
The typical saving is around £250 per year for the basic-rate taxpayer, but the backdated amount can provide a significant lump sum. According to HMRC, thousands of eligible couples fail to claim the allowance each year, leaving money unclaimed.
Impact on Families with Caring Responsibilities
The listener who called into the podcast explained that his wife has been a full-time carer for their severely disabled younger son for 13 years, receiving carer’s allowance and disability living allowance for their son. They do not claim child benefit. Lewis’s advice underscores that even families with high care needs must navigate complex tax rules to access available reliefs.
The warning comes as many households face financial pressures. The marriage tax allowance is designed to help couples where one partner earns little or no income, but the strict eligibility criteria mean that even a small increase in the higher earner's salary can disqualify them entirely. Lewis urged couples to check their tax status and consider pension contributions as a way to stay within the basic-rate band.
