Two million couples missing out on tax break, says HMRC

Two million couples missing out on tax break, says HMRC”

HMRC has admitted that as many as two million married couples and couples in civil partnerships are failing to claim the "marriage allowance", which allows those who earn £11,500 or less a year to transfer £1,250 of their personal allowance to their spouse or civil partner if they earn between £11,501 and £45,000 (£43,000 in Scotland) each year.

It is a scheme created to help married couples (and members of civil partnerships) where one partner pays the basic rate of income tax (earning between £11,501 and £45,000 or £43,000 in Scotland) while the other is a non-taxpayer.

A whopping million British married couples are missing out on £600 each in marriage tax breaks, figures have revealed.

Figures released by HMRC under the Freedom of Information Act show that, while take-up is growing, around two million couples are missing out on the "marriage allowance", which was introduced in 2015.

If the above conditions are satisfied, the partner not paying tax can transfer 10% of his or her tax allowance to a partner, so saving £230 in this tax year.

What's more, you can backdate your claim to include any tax year since 5 April 2015 during which you were eligible for the allowance.

Sir Steve Webb, a former pensions minister who is Royal London's director of policy, said: 'The take-up of the new allowance is shockingly low. Even in its third year of operation, around two million couples who could benefit from the marriage allowance are not doing so.

Taxpayers have complained that the application process can be cumbersome, while some have said they have been unfairly rejected.

Once the Marriage Allowance has been claimed, both partners (if under PAYE) will receive a different tax code so that the Marriage Allowance is reflected such as with the codes "M" and "N". They will also need a way to prove their identity (eg, the last four digits of the account that their child benefit, tax credits or pension are paid into, or their passport number and expiry date).

"This is how it works: you need to be married or in a civil partnership, not cohabiting".

If you want to make a back-dated claim, there will be a section in the online application that you can fill in. So if you do not pay income tax - I don't care whether you work part time, I don't care if you volunteer. However, HMRC says it encourages the self-employed to apply now.

Who can apply for the marriage allowance? .

At current rates the tax break is worth £230 per couple per year, but the claim can be backdated for the past two financial years, saving you £662 in total.

You were born before April 6, 1935.

Live overseas - as long as you get a Personal Allowance.

To benefit as a couple, the lower earner must have an income of £11,500 or less.

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