The Little-Known Tax Perk of Being Married

In last week’s article we looked at the Married Couple’s Allowance, a tax break for married couples where at least one of the partners was born before 6 April 1935. In this article, we introduce you to the lesser known Marriage Allowance, an income tax break for married couples of any age, but there are still very specific eligibility conditions in order to benefit from this allowance. Here, we discuss those circumstances and provide an example that will be useful to those who are studying for any of the CII CF1, R01, R03, R06, AF1, or AF5 exams.

This article is correct as at 10 October 2024 and is relevant to examinable tax year 2024/25.

Let’s remind ourselves of the circumstances that need to exist for the Marriage Allowance to apply:

• Firstly, couples need to be married or in a civil partnership.
• The spouse wishing to transfer must have an income of less than £12,570.
• The spouse receiving the transferred allowance must not be a higher rate or additional rate taxpayer.
• The receiving spouse must be resident in the UK for tax purposes.
• The amount or Personal Allowance that can be transferred in the 2024/25 tax year is limited to £1,260.

This, therefore, only benefits couples where one partner doesn’t earn enough income to use their full personal allowance (less than £12,570) and the other one is paying tax at no more than the basic rate.

For those born before  6 April 1935, it is probably more beneficial to claim the, more generous, Married Couple’s Allowance instead (you can still apply for the marriage allowance, but it’s not possible to receive the Marriage Allowance and the Married Couple’s Allowance at the same time).

Let’s look at an example

Barbara receives an annual State Pension of £4,000. Her personal allowance is £12,570 so she can transfer the full £1,260 to her husband, Michael. Michael is also retired and receives £15,000 per year, made up of private and State Pension. His personal allowance can, therefore, be increased from £12,570 to £13,830. The 20% saving on this extra bit of allowance is equal to £252.

Some couples may not know about this extra tax perk, and the fact they will have to make an online claim may also deter some people.

A claim can be backdated to include any tax year since 5 April 2020 someone was eligible for. The claim can be made through self assessment or by filling in a MATCF form – more information regarding how to apply can be found on the gov.uk website.

Grab the resources you need!

If you’re studying for your CII R03 exam, and you don’t feel 100% confident of a pass, grab our free taster to try out one of Brand Financial Training’s mock exam papers for yourself.  Click the link to download the R03 mock exam taster now!

Alternatively, you can download the taster for CF1, R01, R06, AF1, or AF5 if any of those exams is causing you to worry.