The basics
The marriage allowance came into effect on 6 April 2015. Some couples are only just becoming aware of the marriage allowance. The good news is that claims can be backdated for up to four years.
What is Marriage allowance?
Marriage allowance allows an individual to transfer 10% of their personal allowance (£12,500 in 2019/2020 so the amount transferred is £1,250) to their spouse or civil partner. For this to work you would ideally have at least 10% of your personal allowance unused, therefore for 19/20 your earnings should be below £11,250 this then enables your partner to have an extra £1,250 tax free income which results in a tax saving of £250.00 for you as a couple.
The partner receiving the extra allowance must be a basic rate tax payer (paying tax at 20%) as the allowance in not available to higher rate tax payers.
How can I claim a refund?
The person giving up their personal allowance needs to make the claim and as part of doing this, can also make claims for earlier years.
You can make the claim through the GOV.UK website by clicking on the link below.
https://www.gov.uk/marriage-allowance
What are the time limits?
In order to claim a refund going back as far as the 2015/2016 tax year, couples have until 5 April 2020 to register the claim.
If you do make a claim before 5 April 2020 for each of the previous four tax years together with the current 2019/2020 tax year it could be worth up to £1,150 to you as a couple.
- 2019/20 tax year: the personal allowance was £12,500 meaning £1,250 can be transferred (maximum £250 tax saving).
- 2018/19 tax year: the personal allowance was £11,850, meaning £1,190 (rounded up) can be transferred (maximum £238 tax saving).
- 2017/18 tax year: the personal allowance was £11,500, meaning £1,150 can be transferred (maximum £230 tax saving).
- 2016/17 tax year: the personal allowance was £11,000, meaning £1,100 can be transferred (maximum £220 tax saving).
- 2015/16 tax year: the personal allowance was £10,600, meaning £1,060 can be transferred (maximum £212 tax saving)