Couples urged to see if they can save up to £1,256 via tax break ‘designed by HMRC to boost your income’
Households are being urged to check if they could benefit from tax breaks
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Couples with one partner on a low income may be able to benefit from a tax break known as the marriage allowance.
The warning comes as taxpayers face paying more tax, due to frozen or reduced tax allowances.
Laura Suter, AJ Bell’s head of personal finance, said: “Lots of people are paying more tax, thanks to frozen or reduced tax allowances brought in by the current Government. But many households are missing out on entirely legitimate ways to bring in tax-free income.”
Ms Suter urged people to take some time to understand how the tax system works and what they are entitled to, adding that people don’t need to earn hundreds of thousands of pounds and employ an account to apply.
Claiming the marriage allowance could mean less tax is paid as a couple
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She said: “The marriage allowance is a great way to claim some money back if one half of the couple earns less than £50,270 a year and the other either earns less than £12,570 or doesn’t earn any money at all."
If the lower earner earns less than the personal allowance, which is currently £12,570 a year, then it may be the household can benefit from the lower earner transferring some of their personal allowance to their partner.
The marriage allowance lets a person transfer £1,260 of their personal allowance to their husband, wife or civil partner.
It reduces their income tax by up to £252 in the tax year, which runs from April 6 to April 5 next year.
While it can mean the lower earner has to pay more tax, it could mean less tax is paid as a couple.
Ms Suter said: “The Government lets those who are married or in a civil partnerships share their tax-free earnings allowance each year.
“It means that if one of you hasn’t used up your personal allowance of £12,570 a year you can hand it over to your partner. That could save you up to £252 in the current tax year.”
It may be possible to get an even greater boost, as there is the possibility to claim retrospectively.
Ms Suter explained: “What’s even better is that you can backdate any claims for up to four years, assuming you were eligible in those years – which would get you a total of £1,256.
“You can claim it online directly through the Government, you’ll just need yours and your partner’s National Insurance numbers plus some forms of ID.”
It is crucial applicants watch out for scam websites such as fraudsters purporting to be the Government website so they can seize personal details and hard-earned cash from victims.
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The tax allowance is designed by HMRC to help people boost income
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The personal finance expert is reminding people the tax break is entirely legitimate.
She said “There is no need to feel like you’re doing something underhand or not paying the tax you owe, because these tax breaks are deliberately designed to by HMRC to help people boost their income.
“It’s a useful reminder to couples to check they are splitting their finances in the most tax-efficient way too.”
The marriage allowance calculator on the Gov.uk website is an online tool that shows how much tax a couple would save if they applied for the marriage allowance this year.
The calculator doesn’t include any allowances such as personal savings allowance or dividend allowance.