How to get a £432 tax break through your Marriage Allowance
You might be entitled to claim a bumper tax break this year if you're married or in a civil partnership.
The government introduced the Marriage Allowance tax-break in April last year especially for married or civil partnership couples, which is a nice little windfall.
You and your partner can share your tax-free Personal Allowance to help them lower their overall tax bill.
This tax year 2016/17 you can transfer £1,100 of your Personal Allowance to your husband, wife or civil partner, which will save £220.
However, you may be able entitled to an even bigger tax break of £432 this year if you were eligible but didn’t take advantage of the Marriage Allowance in 2015/16.
How to claim £432 from the scheme
The Marriage Allowance is meant to help four million married couples and 15,000 in civil partnerships. However, according to official figures released in January just 332,301 eligible couples, or 8%, have taken advantage of the tax-break since it launched.
In order to encourage more take-up, the government is offering couples the chance to claim backdated payments for up to four years.
As the scheme has only been around for one year, you’ll only be able to claim the 2015/16 allowance if you missed out.
The 2015/16 Marriage Allowance gave married couples or those in a civil partnership the chance to transfer £1,060, which could save a couple £212.
So as long as both of you met the criteria for that year you can claim - and combined with this year's allowance could save you a whopping £432 on your tax bill.
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Who is eligible?
As we’ve already mentioned you’ll need to be married or in a civil partnership to apply for the Marriage Allowance. Unfortunately, living together even if you have children doesn’t make you eligible for the scheme.
Both partners need to be born on or after 6 April 1935 (if one or both of you was born before this date you can claim the Married Couple’s Allowance).
One partner needs to be a non-taxpayer, which means they earn under the Personal Allowance threshold. For 2015/16 that means earning less than £10,600 and for 2016/17 less than £11,000.
The other partner has to be a basic rate taxpayer. For the 2015/16 that means earning less than £42,385 and for 2016/17 less than £43,000.
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How to apply
You can apply for the Marriage Allowance on the HMRC website or by phone on 0300 200 3300.
You’ll need both of your National Insurance numbers plus ID for the non-taxpayer. It should be the non-taxpayer that makes the application.
HMRC will notify you if you are eligible for the 2016/17 allowance and whether you were also eligible for the 2015/16 allowance.
Most of the time the Marriage Allowance will be paid adjusting the recipient partner’s tax code. The transferring partner will also get a new adjusted tax code for the year.
The Marriage Allowance will continue to be paid until you cancel it or you inform HMRC that your circumstances have changed.