Marriage Tax Allowance – Benefit

I recently was asked by a client about married couple’s tax allowance as they had heard that it can reduce your tax bill each year if you are married or in a civil partnership. So, I did some research and thought I would spread the word by sharing this information with you.
What is it?
The marriage tax allowance is contained within your personal tax allowance (the amount you can earn tax free each tax year). It allows you to transfer £1,250 of your personal allowance to your spouse or civil partner if they earn more than you.
Who is entitled?
Well it stands to reason firstly that you are married or in a civil partnership. One of you needs to be a non-tax payer; meaning that you are earning below the current tax-free allowance threshold (for 2020/21 this is £12,500). The other partner needs to be a tax payer and earning less than £50,000. You both need to have been born on or after 6 April 1935.
How does it work?
To make it easy to follow, I am going to use an example to illustrate it.
Peter and Linda are a married couple. Linda is an IT software developer and earns £45,000 per year. She is basic tax payer. Peter works part time and earns £10,000 at a local bistro as a waiter. His personal allowance is the same as Linda’s except he is not using all of his allowance, in fact he has £2,500 spare (being the difference between £12,500 and £10,000).
Peter is therefore able to elect to transfer his marriage allowance of £1,250 from the spare £2,500 that he is not using and transfer it to his wife Linda. This means that Linda’s tax free allowance limit increases from £12,500 to £13,750. Linda therefore has an extra £1,250 that she otherwise would have paid tax on, which gives her an additional £250 per year (20% of £1,250).
How do I go about getting this allowance?
It is actually very simple to do and will only take a few minutes using the online application at HMRC
https://www.gov.uk/apply-marriage-allowance
You will both need your national insurance numbers and will need to be able to prove your identity. If you think you would qualify for this, go to the above link and apply.