Despite its availability, the Marriage Allowance (MA) remains underutilized, with only 1.8 million out of 4.2 million eligible couples claiming it. This benefit can reduce tax bills by up to ยฃ252 annually, but many are unaware of their eligibility or misunderstand the requirements. Hereโs a clear breakdown of the Marriage Allowance, including who can claim it, how to apply, and recent updates.
Eligibility for Marriage Allowance
To qualify for Marriage Allowance, the following conditions must be met:
- Marital Status: The couple must be married or in a civil partnership at the time of the application. This benefit can still be claimed after separation or if one spouse has died.
- Income Tax Status:
- The transferee (the person receiving the allowance) must not be liable to tax at a rate other than the basic rate, the dividend ordinary rate, or the starting rate for savings. Essentially, the transferee should be a basic rate taxpayer or lower.
- The transferor (the person giving up part of their personal allowance) cannot be a higher or additional rate taxpayer.
- Not Receiving Married Coupleโs Allowance: The couple cannot claim the Married Coupleโs Allowance, which is available to those born before April 6, 1935.
How Marriage Allowance Works
Marriage Allowance allows the transfer of ยฃ1,260 of the annual personal allowance from one partner to the other. The maximum benefit is a tax reduction of ยฃ252 (20% of ยฃ1,260).
Claiming Marriage Allowance
The process for claiming Marriage Allowance can be complex:
- For Self-Assessment Taxpayers: The transferor should indicate the claim on their tax return.
- For Non-Self-Assessment Taxpayers: Complete and post the Marriage Allowance form (MATCF) to the address provided on the form. The recipient cannot make the claim directly.
Enduring Elections
- Self-Assessment Claims: If claimed via a self-assessment tax return, the election must be made each year.
- MATCF Form: Elections made through the MATCF form will be enduring, carried forward each year until canceled. If an enduring claim exists and the transferor is taxed under PAYE, their tax code will show a suffix:
- โNโ: Indicates the transferor is transferring the allowance to their spouse.
- โMโ: Indicates the recipient is receiving the allowance.
Time Limits for Claims
- Claims for repayment of overpaid tax, including Marriage Allowance refunds, must be made within four years.
- For PAYE taxpayers, refunds will adjust their tax codes. Self-employed or self-assessment taxpayers will see their final tax bill reduced. Refunds will be issued by cheque unless arranged otherwise from February 2024, when refunds can also be made to a third party (e.g., an agent).
Key Resources
For additional information and to access forms:
- Agent Update Issue 111 โ Marriage Allowance
- Agent Update Issue 113 โ Marriage Allowance
- Legislation on Marriage Allowance
Understanding the eligibility and claiming process can ensure that you and your partner take full advantage of the Marriage Allowance and potentially reduce your tax liabilities.
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