Marriage Allowance – what is it?

When you work and live permanently in the United Kingdom, you also have to pay taxes in the UK. It is worth remembering, however, that this also gives you the opportunity to use the tax reliefs provided for by British tax law. One of these reliefs is the Marriage Allowance, a relief for married couples that allows you to transfer a set part of your tax-free allowance to your partner. How exactly does this work? How do you apply for the Marriage Allowance and why is using it good for the household budget? More on this in the article below.

What is the Marriage Allowance?

Marriage Allowance (also: Marriage Tax Allowance) is a tax relief for married couples in the UK that allows you to save up to £252 a year by lowering the combined income tax bill for you and your partner for a given tax year. Using the relief is possible when the earnings of the lower-earning person do not exceed the tax-free allowance threshold - in that situation, this person can transfer a set part (just over 10%) of their Personal Allowance to their husband, wife or partner.

Tax relief for married couples in the UK - the key information

Marriage Allowance - who is entitled to it?

When it comes to the conditions qualifying you for the relief, it is worth clearing up right at the start a misunderstanding arising from its very name - does a civil partnership also qualify for this solution? Although the term Marriage Allowance suggests the relief is aimed exclusively at married couples, in reality people in a formal relationship can benefit from it - both married couples and those in a civil partnership have the right to apply for the relief.

• It is worth noting the existence of one more relief: the Married Couple’s Allowance. You can use it if you are married or in a civil partnership and you or your partner were born before 6 April 1935. If, as a couple, you qualify for this relief, you can save between £427 and £1,108 on your tax bill.

When can you use the tax relief for married couples in the UK?

The next requirement concerns the level of your income. You can apply for the Marriage Allowance if:

• you do not pay Income Tax or your earnings do not exceed the Personal Allowance threshold (the tax-free allowance is £12,570 in the 2024/25 tax year),

• your partner’s earnings fall within the basic rate of income tax (between £12,571 and £50,270 in the 2024/25 tax year) before the relief is applied.

Marriage Allowance - how does it work?

The tax relief for married couples works by transferring around 10% of the tax-free allowance due to the lower-earning partner to the other person, whose income exceeds the upper limit of the Personal Allowance. As a result, you can transfer £1,260 of your personal allowance (£12,570) to your husband, wife or partner. What does this achieve?

Example 1:

Imagine a situation in which partner A’s income is £7,000 and partner B’s income is £21,000. Partner A’s earnings are well below the upper limit of the Personal Allowance, which means no income tax has to be paid on them. For partner B, however, the situation is different: after using up the £12,570 personal allowance, they still have a further £8,430 of income, which is taxed at the basic rate (20%).

Using the Marriage Allowance, partner A can transfer £1,260 of their individual allowance to partner B, which lowers the taxed amount to £7,170, without affecting their own tax position, because partner A’s income still falls within the Personal Allowance, even after their allowance is reduced to £11,310.

Example 2:

But what if your earnings are closer to the upper limit of the Personal Allowance? In that situation, using the relief and reducing your available tax-free allowance may mean you have to pay income tax on earnings below £12,570, but this does not mean the Marriage Allowance stops being worthwhile.

We can easily illustrate this by changing partner A’s income in the example above from £7,000 to £12,000. After transferring £1,260 of the allowance to partner B, partner A will have to pay tax on the amount exceeding the Personal Allowance reduced to £11,310, i.e. on £690. The savings on partner B’s tax bill, however, remain unchanged. As a result, the income tax payable by partners A and B counted together as a couple will still be lower than before the relief was applied.

How do you apply for the Marriage Allowance?

You can apply to HMRC for the Marriage Allowance to be applied to your income tax:

• by applying online,

• through Self Assessment, if you are already registered and file this way,

• by sending an application to HMRC by post.

Applying for the tax relief for married couples is free, and the application should be made by the person with the lower earnings.

Can you apply for the relief for earlier years?

You can apply for the Marriage Allowance not only for the current tax year, but also for up to four previous years, provided you and your partner met the requirements for using it. It is worth remembering that the tax-free allowance is set for each tax year - so you need to use the correct amount for the year in question.

• Important: You can also apply if your partner has died within this period.

Looking for an accountancy firm in the UK?

It is worth having at least a basic knowledge of the taxes in force in the UK, as well as the reliefs you can count on. If, however, you don’t feel confident with this kind of subject, you can put your income tax affairs in the hands of a professional accountancy firm. For many years we have been helping both individual and business clients take care of their finances, providing comprehensive support with completing formalities, meeting deadlines and achieving the best possible outcome!