According to the numbers, there are a lot of people in the UK who aren't getting the most from their marriages. A wrinkle in tax rules means that, if they're eligible, married couples can save up to £250 in tax year. If you missed the boat on this last year, you can even backdate it so you don't lose out! Right now, barely a quarter of eligible couples in the UK are taking advantage of the scheme, and it's costing them real money. Let's take a look at what the Marriage tax Allowance is all about.
How does The Marriage Allowance Work?
The scheme is pretty simple. If you're making less than the 2019/20 tax-free Personal Allowance of £12,500, you can transfer up to a £1,250 chunk of your own Personal Allowance to your partner. That counts for civil partnerships as well as marriages. As long as your partner isn’t earning more than the Basic Rate tax threshold of £50,000, you can qualify. All told, that’s £1,250 more of their earnings that won’t get taxed, meaning as much as £250 more in your combined pockets each year. The tax thresholds and Personal Allowance obviously change over time, but you can still claim back your tax for up to the last 4 years. The idea is to make sure people get the full benefit of their Personal Allowance, even if they can’t use all of it themselves. Pensioners can apply, too - as can people living abroad, as long as they've got a Personal Allowance to transfer.
What Happens If My Circumstances Change?
Once you've set your Marriage Allowance up, you don't need to apply again unless your situation changes. Obviously, getting divorced means you no longer qualify for Marriage Allowance, for example. The death of either partner will do the same, naturally enough. You can even cancel it yourself if you need to for any reason.
Since there are income thresholds involved, a change in either your earnings or your partner’s can also affect your Marriage Allowance. For example, if you suddenly start making more than your Personal Allowance, you won’t have any extra to transfer to your spouse or partner. In the same way, if you find yourself bumped into a higher tax bracket, you no longer qualify to receive Marriage Allowance at all. When something changes in your circumstances and you’re not sure if you still qualify for or benefit from the scheme, talk to RIFT to keep yourself on the right track.
How Do You Apply For Marriage Allowance?
It’s actually very easy to apply to claim Marriage Allowance. You can get it all done online at the government website, as long as you’ve got both of your National Insurance numbers handy. Some proof of your identities will also be needed, as usual when you’re dealing with HMRC.
In fact, claiming Marriage Allowance is so simple that you really shouldn’t be paying anyone to do it for you. Don’t get us wrong – there are lots of times when some professional advice can protect you and your money. At RIFT, we go toe-to-toe with the taxman every day, claiming refunds, handling tax returns and much more. However, not every job needs a tax expert to take care of it, and some so-called “experts” are just stringing you along for a little cash.
Hasan Root, a dream lover!