The Marriage Allowance, a scheme introduced by David Cameron in 2015, serves as a pivotal yet often overlooked tool for married couples and civil partners aiming to alleviate their tax obligations.

Despite its inception over seven years ago, a considerable proportion of qualifying couples have not yet harnessed this facility to reduce their annual tax liabilities.

At the heart of the Marriage Allowance is its capacity to significantly reduce the annual tax burden for spouses or civil partners.

It offers a potential saving of up to £252 each year.

The essence of the Marriage Allowance lies in permitting the partner with lower earnings (under the £12,570 threshold) to transfer 10 per cent of their Personal Allowance for Income Tax to their higher-earning spouse, assuming the latter pays tax at the basic rate.

Imagine a scenario involving a couple where one partner’s income is £8,500 (below the tax-free threshold) while the other’s is £20,000.

Each partner is initially entitled to the standard personal tax allowance of £12,570.

Consequently, the higher-earning partner would be taxed on £7,430 of their income.

Through the Marriage Allowance, the partner with lower earnings has the option to transfer £1,260 of their tax-free allowance to their spouse.

This adjustment increases the Personal Allowance of the higher earner to £13,830, thereby reducing their taxable income to £6,170, which translates into a saving of £252.

Eligibility criteria

It’s important to note that individuals with earnings between £11,310 (the personal allowance minus £1,260) and £12,570 might incur some tax liability upon transferring their allowance.

Nonetheless, the cumulative financial benefit for the couple often justifies this move.

If the criteria are met for each year, then Marriage Allowance could be claimed for the current tax year and the four prior tax years.

This provision also extends to situations involving the death of a partner, enabling the survivor to claim retrospectively.

How to apply

The application will need to be completed by the lower earning spouse donating 10 per cent of their Personal Allowance.

Engaging with the application process for the Marriage Allowance is a straightforward yet essential step towards optimising your tax savings.

This is primarily done online but can be done by calling HMRC, filling in a Marriage Allowance form, or through your Self-Assessment Tax Return.

Here’s a detailed walkthrough to guide you through each step of applying online:

• Gather necessary documents: Collect both partners’ National Insurance numbers and one partner’s form of identification, such as a passport or P60 form.
• Create a Government Gateway account: Set up your account to access Government services, including the Marriage Allowance application.
• Navigate to the application: Use your Government Gateway account to find and access the Marriage Allowance application on the HMRC website.
• Fill out the application form: Complete the online form with accurate information about your circumstances and eligibility.
• Submit and await confirmation: After submitting, you’ll receive a confirmation from HMRC that your application is under review.
• HMRC reviews your application: Wait for HMRC to assess your eligibility, which may involve additional inquiries.
• Receive notification of outcome: HMRC will inform you about the decision, detailing any changes to your tax allowances.
• Understand automatic renewal: Remember, the Marriage Allowance renews annually, but inform HMRC if there are any changes in your situation.

Alternatively, your accountant could do this for you.

If you’d like help applying for the marriage allowance, it’s always best to speak to a qualified and experienced accountant who can guide you through every step in the process.

We are experts in this regard and have given dozens of our clients access to this valuable form of tax relief.

For more information or expert advice, please get in touch.