There is a new tax allowance for married couples. How does it work and who is eligible? - Evolution Financial Planning

What is on offer?

In the most recent budget the Government have decided to offer married couples a tax allowance which starts from April 2015. This is called Marriage Allowance.

The Government says that it should benefit around 4 million couples.

You can now register for it online here: https://www.gov.uk/marriage-allowance

Who is it for?

This allowance is for both married couples and civil partners. It is for couples where one partner either doesn’t work, or earns less that the personal tax allowance, which will be £10,600 from 5th April 2015.

Why should we bother?

Well it will give you £4 per week, which may seem like a small amount but that works out to around £212 per year, which is not to be missed out on for most people!

It is only available to those on the basic tax rate of 20%. Those in the higher tax bracket of 40% or 45% will not qualify as it would not give them any benefit.

How does it work?

This allowance lets you transfer a maximum of £1,060 of your personal tax allowance to your partner (the one earning over the personal tax threshold).

This transfer will increase your partner’s personal allowance and in turn will reduce the amount of income tax they have to pay.

It will reduce your own personal allowance, so if you happen to go over your new threshold, you will have to pay tax on the difference.

 

When will we receive our money?

Once you have applied, the changes will be made automatically.

Payouts are due to start from April 2016 and then further in the future the payments will be made via the PAYE or self assessment systems.

 

I am getting Married Couples Allowance already, how does it affect me?

You will not be able to apply for the new Marriage Allowance as well.

Married Couple’s Allowance was abolished in 2000 for those who were not already 65 at the time.

So if you were born before 1935 you cannot claim for Marriage Allowance but you could still claim for the old Married Couple’s Allowance.

 

Who is it NOT available for?

The payments will carry on automatically until one of the following happens:-

Your circumstances change, ie you get divorced or separated. The partner who has transferred their allowance will be able to revoke it once the divorce goes through. On separation, if it is done formally, the partner who transferred their allowance can ask for it back from HMRC.

If the partner of the person transferring the allowance dies, then the personal allowance would automatically be given back. The deceased’s estate would treat any income with the increased allowance in mind.

If you want to know any more details, please go to the website above and if you are eligible, please apply now!

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