Married couples and civil partners can register online for a new tax allowance, but only households on low incomes stand to benefit.

The marriage tax allowance allows you to transfer £1,250 (10%) of your personal allowance (the amount you can earn tax-free each tax year) to your spouse or civil partner, if they earn more than you.

But if that partner is a higher rate taxpayer, earning more than £50,000 a year, the couple will be excluded from the tax break.

The marriage tax allowance for the tax year 2020/21 is up to £250. However, you can get a rebate by back-claiming since 05 April 2016. The amounts for each year are:

• 2015/16 - £212
• 2016/17 - £220
• 2017/18 - £230
• 2018/19 - £238
• 2019/20 - £250
• 2020/21 - £250

How does it work?

All workers have a personal allowance for tax purposes. This is the amount of money an individual can earn in a year before they must pay tax. It is currently £12,500 and it is rising each year in April. 

For example, if one person earns £5,000 (part-time) and their partner earns £35,000 (full-time, basic-rate taxpayer).

The lower earner can transfer £1,250 of their unused allowance to the higher earner.

The higher earner personal allowance increases by £1,250 to £13,750, so thanks to 20% relief they will pay £250 less tax over the year.

The £1,250 limit will increase automatically in line with the personal allowance.

When you can get the marriage tax allowance

In most cases, the allowance will be given by adjusting the recipient partner's personal tax code.

The partner who transferred their personal allowance will also receive a new tax code, if employed.

If the recipient partner is in self-assessment, it will reduce their self-assessment bill.

Who can apply

It's the non-taxpayer who must apply to transfer their allowance.

If the taxpayer applies, you're doing it the wrong way round and it won't work.

You do NOT have to apply every year. Your personal allowance will transfer automatically to your partner until one of you cancels the marriage allowance or you inform HMRC that your circumstances have changed, eg, because of divorce, employment pushing you into a higher-rate tax threshold or death.

Who will lose out?

Married couples and civil partners where one person earns over the basic rate threshold are exempt, regardless of what their partner earns.

Couples where the lowest earner brings in more than the personal allowance will also miss out because only unused allowances can be transferred.

Couples who are cohabiting but are not married or in a civil partnership will also miss out, regardless of how long they have been together.

Please contact our office on 02082211165 / 07789758177 and our team of professional advisers will help you to claim the marriage tax allowance.