Registration has now opened for a new marriage tax allowance. The allowance is available to those whose income is less than £10,600 in the 2015 to 2016 tax year and such individuals will be allowed to transfer up to £1,060 of their unused allowance to their partner in order to reduce their tax bill. However, the receiving partner must be a basic rate taxpayer, as of April 2015, that will mean they qualify if they earn between £10,601 and £42,385 a year.
Who can claim Marriage Allowance?
An individual will be able to claim Marriage allowance if all of the following apply:
– They are married or in a civil partnership
– They have an annual income of less than £10,600 – including pensions, savings and investments.
– Their spouse or civil partner has an annual income of between £10,601 and £42,385.
– Both persons were born on or after 6 April 1935.
How much will it save?
Up to £212 a year. From April 2015, anything you earn between £10,600 and £42,385 a year will be taxed at 20%. If you earn for example, £8,000 per year, you will effectively have £2,601 of your allowance that you are not using (as of April 2015). Of this you can transfer the full £1,060. This will increase your partner’s tax-free allowance to £11,660, and that 20% saving on the extra amount is equal to £212.
The Government has stated that the introduction of the allowance seeks to introduce the recognition of marriage into our tax system however, it has been widely criticised for not making it available to all married couples and partners and only benefitting households on low incomes. To register your interest in receiving the allowance or find out more about the scheme, click here: https://www.gov.uk/marriage-allowance