Introducing the new Marriage Allowance

A new Marriage Allowance has now come into force, giving more than 4 million married or civil partnership couples (born on or after 6th April 1935) the opportunity to save up to £212 per year.

How does the new Marriage Allowance work?

The allowance will apply to couples made up of one non-taxpayer and one basic-rate taxpayer, who will be able to share some of the non-taxpayer’s unused annual income tax allowance.

As of this month, the personal allowance, the amount you can earn before being taxed, has risen from £10,000 to £10,600. Those whose earnings fall beneath this threshold  (including earnings from wages, savings and pensions) have the opportunity to share up to 10% of their annual tax allowance with their spouse or civil partner – providing that their partner is a basic-rate taxpayer. This means they need to earn between £10,601 and £42,385 per year to qualify.

For example,if your spouse or partner currently earns £7,500 a year, £3,100 of their allowance will not be used. This means that if you qualify for the new marriage tax threshold, your spouse or partner can transfer over £1,060 (10% of their personal allowance). This will increase your tax-free allowance to £11,660.

To register for the new Marriage Allowance, head to gov.uk/marriage-allowance to enter your details. Following this, HMRC will contact you to progress the application and provide you with a new Pay As You Earn (PAYE) tax code. The altered tax code will reflect your new personal allowance and result in less earnings being deducted from your pay each month.

Couples will have until April 6th 2016 to apply. Those without access to the internet can apply by phone when the line is introduced in the summer. 

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