The Marriage Allowance Deadline for 2015/16 Retrospective Refund Claims is Approaching!

The marriage allowance is an initiative that was rolled out on 6th April 2015. It allows individuals to transfer 10% of their tax-free allowance to their spouse or civil partner, should they not be using that allowance at all or if they are only using a portion of it.

The savings are calculated as 20% of the tax-free allowance figure that is transferred. If 2019/2020 is used as an example, the standard tax code gives £12,500 tax free allowance. 10% can be transferred, and 10% of £12,500 is £1,250. There would then be a tax saving of 20% applied to that, equating to £250 in tax savings for the current tax year. The recipient’s tax code would be adjusted to encompass the additional allowance and similarly, the non-taxpayer would see a change to their tax code.

The allowance can be claimed retrospectively, and rebates for previous tax years are issued as cheques. There is a four year limit on reclaiming tax so any marriage allowance refund submissions for the tax year 2015/16 will need to be submitted by 5 April 2020. After that the 2015/16 tax year will be closed to claims.

The rules surrounding marriage allowance are refreshingly simple – one individual must be a non-taxpayer and the other must be a 20% taxpayer, as higher and additional rate taxpayers are not eligible to receive the marriage allowance transfer. Both parties must have been born on or after 6 April 1935 and they must be married or in a civil partnership. Co-habiting or being in a relationship do not count.

There is further guidance relating to the marriage allowance on GOV.UK, which can be accessed here.

If you need help claiming marriage allowance whether it be a retrospectively or in the future, or help with self assessment please get in touch. We’d be more than happy to help.