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NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.

Sharing the Marriage Allowance is a bit of an old chestnut but often comes up in conversation during client meetings. It can produce a rather nice bonus if a successful claim is made. Equally, in the current COVID 19 endemic where jobs have been lost or working hours reduced, many more of our clients or their immediate families could benefit from this entitlement.

The Marriage Allowance lets you transfer £1,250 of your Personal Allowance to your husband, wife, or civil partner. It is free to apply for the allowance. The Personal Allowance is £12,500 (current tax year) which is the amount of income you do not pay tax on. A successful claim can reduce your tax bill by £250 (current tax year). To benefit as a couple, you need to earn less than your partner and have an income of £12,500 or less (a non-taxpayer). Your partner’s income must be between £12,501 and £50,000 (a basic rate taxpayer). In addition, you can backdate your claim to include any tax year since 5 April 2016 that you were eligible for Marriage Allowance.

Let us take a look at a fictional example but based around a recent Wingate client experience:

Following a recent Wingate financial planning meeting where the sharing of the Marriage Allowance was discussed in our Legislation Update section, new client James decided to apply for the allowance with his wife’s permission. James is a basic rate taxpayer, earning below £50,000, made up of pensions in payment and his State Pension. His wife Lydia is a non-taxpayer and enjoys a State Pension of around £4,000 per year.

James initially called the Marriage Allowance enquiry helpline (Tel. 0300 200 3300) and then went online to complete the application. Time spent 40 minutes. Seven days later a cheque for £934.33* was waiting in a brown envelope on his doormat (figuratively speaking). Not bad for 40 minutes work!

Demonstrating the immediate benefits of financial planning can sometimes be tricky. We feel that through working closely with our clients and understanding their circumstances, we will add value over time. If you would like to discuss your planning objectives and work with a diligent planning firm, please get in contact.

*It is worth pointing out that an adjustment may be made to your tax code rather than a monetary payment particularly if your claim is not being backdated in respect of previous tax years.

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26 Apr 2024

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