22 Dec How the Marriage Allowance Works
The Marriage Allowance enables you to reduce your tax by up to £212. This is achieved by transferring up to £1,060 of your personal allowance to your husband, your wife, or your civil partner.
Your personal allowance is the part of your earnings that you don’t have to pay tax on and it’s usually set at £10,600.
For example, if you transfer £1,060 to your partner, your personal allowance will then drop to £9,540. As long as you are earning less than this amount you will continue to pay no tax, but your partner will benefit from the transfer of your Personal Allowance and pay £212 less tax each year.
If you need any advice or help about what allowances you can claim as a married couple, then SQK Accountancy in Manchester can give you all the guidance you might need.
In order to apply for the Marriage Allowance:
- You and your partner must have been born before April 1935
- Your partner must earn between £10,601 and £42,385
Anyone who is born before April 1935 can apply for Married Couple’s Allowance.
If you are living abroad, but you still have a personal allowance, you can still claim Marriage Allowance.
You can apply for the Marriage Allowance at any time, over the internet and it will be backdated to the 6th April, which is the beginning of the financial year.
If you are self-employed your tax code will be changed when you send in your Self-Assessment form. Employed persons will have their code changed, which might take up to eight weeks. The allowance is then transferred every year until you apply for it to be cancelled, or your circumstances change due to bereavement or divorce.
In the case of the death of your partner the following applies:
- If the Personal Allowance was transferred to your partner, who has now died; then the Estate keeps the increased allowance and yours goes back to £10,600
- If the personal allowance was transferred to you by your partner, the higher personal allowance will remain in effect until the end of the tax year on the 5th April and then the Estate will have the lower amount. Your personal allowance will go back to £10,600.
SQK Accountancy in Manchester, help individuals and small businesses with their tax and VAT. We provide an affordable service in a friendly atmosphere. If you need any help or advice contact us through the website or give us a call on 020 8798 0657.