Couples have one year remaining to claim marriage allowance refunds dating back to 2015/16, the year the tax relief first came into effect.
The Low Incomes Tax Reform Group (LITRG), which is part of the Chartered Institute of Taxation (CIoT), advised that spouses and civil partners can still transfer their personal allowance as far back as three years ago, even if they did not do so at the time.
The marriage allowance allows an individual to transfer a maximum of 10 per cent of their personal allowance to their spouse or civil partner, 20 per of which is then given as a reduction in the recipient’s tax bill.
In 2019/20, for example, the personal allowance is £12,500, meaning a spouse can transfer a maximum of £1,250 to their partner, resulting in a £250 tax break for the couple.
Should the allowance be backdated to 2015/16, this could result in tax savings of up to £1,150.
While the tax relief is available to all married couples and civil partners, certain conditions must be met before it can be claimed.
The partner claiming the relief must not pay income tax or their income must be below their partner’s personal allowance, and their partner pays income tax at the basic rate – meaning their income is between £12,501 and £50,000. These numbers may differ based on the year you are claiming for.
Commenting on the report, Victoria Todd, of the LITRG, said: “We remind couples that they have until 05 April 2020 to claim back to 2015/16 or they will miss out on that year. This is in line with the general four-year time limit that exists to claim a refund. If a claim is not made within the time limit you will lose out on any refund that may be due and the tax year becomes ‘closed’ to claims.”
She added: “Remember you will only get the full benefit if the person giving up the allowance is not using it and the person receiving the tax reduction can use it.”