Understanding how Marriage Allowance works
There are many tax tricks you can use when you are legally married (or in a Civil Partnership) and some of these include exemptions for Inheritance Tax or Capital Gains Tax. A far more common one to use is the Marriage Allowance (or Marriage Tax Allowance). This explanation applies to English and Welsh taxpayers only!
Most English & Welsh taxpayers benefit from something called a “Personal Allowance”, this is the amount they can earn from all income and pay tax at the rate of 0%. In other words, what they can earn tax-free.
Marriage Allowance allows a spouse whom’ doesn’t plan to use their full personal allowance (due to being a low earner) to transfer some of their personal allowance to their spouse. If the spouse is a basic rate taxpayer (ie: with taxable income between £12,570 and £50,270) they then get the benefit of moving some of their income back into the 0% tax band.
For example, in the tax year 2025/26:
- Spouse 1 is a low earner (with a total income less than £12,570). Spouse 1 can transfer up to 10% of their personal allowance (£1,260) to spouse 2.
- Spouse 2 then (effectively) receives a personal allowance of £13,830 (their £12,570 plus the transferred £1,260 from spouse).
This reduces spouse 2’s tax bill by up to £252 in that tax year – winner!
You can tell if you have received the allowance, as an “M” is applied to your tax code (which can be found on your payslip). You can tell if you have given the allowance (to your partner) as an “N” will be applied to your tax code.
Catches to be aware of
There are some extra rules, for example:
- The receiving spouse must not be a higher or additional rate taxpayer before the transferred personal allowance is received. You should take care and always obtain professional advice if you are not sure.
- You can usually backdate a Marriage Allowance claim up to 4 years. You can usually also claim if your spouse is sadly deceased.
Read more here: https://www.gov.uk/marriage-allowance or https://www.hsbc.co.uk/tax/what-is-the-marriage-allowance/
If your ready to apply: https://www.gov.uk/apply-marriage-allowance
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