Claiming all the tax reliefs you’re entitled to is one thing we advise all our clients to do. Self-employment can after all be a rewarding yet challenging experience, especially when it comes to maintaining the cash flow that keeps you and your business afloat. By claiming all the tax reliefs, allowances and expenses you’re eligible for however, you can keep hold of more of your hard-earned money and make self-employment work for you.
Marriage Allowance is a tax relief that is completely underutilised throughout the UK. If one half of your married couple doesn’t work or works part time, you could be eligible for tax savings of hundreds of pounds. Here we guide you through Marriage Allowance so you can improve your fortunes.
What is Marriage Allowance?
Marriage Allowance is a tax relief available for eligible couples who are married or in a civil partnership. The relief allows the lower earner in the couple to transfer a percentage of their personal allowance to their higher earning partner to unlock vital tax savings.
How much can I save?
In the current tax year (2019/20) eligible married couples or those in a civil partnership can transfer 10% of their personal allowance, which equates to £1,250, to their spouse or partner. The lower earning half of the couple however must earn less than their personal allowance and the higher earner must be a basic rate taxpayer earning between £12,501 and £50,000.
With the personal allowance transfer, your partner can reduce their tax bill by up to £250, which may not seem like a lot but leaves more money in your pocket.
Find out exactly how much you can save by using the government’s Marriage Allowance calculator.
Are we eligible for the allowance?
To be eligible for Marriage Allowance, you must be either married or in a civil partnership. The lower earner must earn less than their personal allowance whilst the higher earner must be a basic rate taxpayer as explained above. Those based in Scotland, must be in a couple where one half earns between £12,500 and £43,430.
You can claim Marriage Allowance if you are in receipt of a pension. Couples living overseas may also be eligible if they still get a personal allowance.
Is it the same as Married Couple’s Allowance?
Despite the similar names, Married Couple’s Allowance is a different tax relief. Married Couple’s Allowance is only available to couples where one or both partners are born before 6th April 1935. Eligible couples born after this date should claim Marriage Allowance.
Please note, you cannot claim Marriage Allowance and Married Couple’s Allowance at the same time.
How do I apply for Marriage Allowance?
You can apply for Marriage Allowance here. A successful application will see your tax code change if you’re employed or receive a pension. The allowance will be applied during Self Assessment if you are self-employed.
Need help claiming all the tax reliefs and allowances you’re entitled to? Contact our team today for support.