Married couples could save a handy £252 a year on their tax bills through a lesser-known tax relief.
The HM Revenue and Customs (HMRC) Marriage allowance enables people to lower their tax bills by transferring a portion of their Personal Allowance to their partner.
More than 2.1 million couples currently benefit from the tax break; but millions more could be missing out, Money Week reports.
How does Marriage Allowance work?
Marriage Allowance lets people transfer £1,260 of their personal allowance to their husband, wife or civil partner. This reduces their tax by up to £252 in the tax year from April 6 to April 5 the following year.
To benefit as a couple, the lower earner must normally have an income below the Personal Allowance – usually £12,570. The higher earner must typically pay income tax at the basic rate, which usually means their annual income would fall between £12,571 and £50,270.
People can find out how much tax they could save as a couple by using the Government’s calculator.
It should be noted that when a portion of a person’s personal allowance is transferred to their partner, the individual might have to pay more tax themselves. However, as a couple, they could still pay less overall.
What’s more, people who find they were eligible for Marriage Allowance can backdate their claim to include any tax year since April 5, 2020. If the full amount is claimable, this could land them with a rebate of just over £1,000.
Who should claim the allowance?
If both earn nothing other than their wages, the person who earns the least should make the claim.
However, if either receives other income, such as dividends or savings, they may need to do more to determine who should claim. If they’re unsure, they can call the Income Tax helpline.
People can apply for the allowance for free online here, or by completing a self-assessment tax return.
