Married Couple’s Allowance And Marriage Allowance; Is It Worth It?
In 2015, the Coalition Government introduced the Married Couple’s Allowance and Marriage Allowance (the difference between the tax breaks being whether one or both partners were born before 6th April 1935). The tax break was introduced with the intention of helping four million married couples and 15,000 civil partners where one parent either doesn’t work or has a part-time role so as to take care of children. However, the allowances have been branded as a flop due to the low take-up.
This controversial tax break for married couples introduced in April 2015 saw only 330,000 successfully claim for it since it was introduced. This equates to only 8% of the total eligible to claim.
What Is The Marriage Tax Allowance?
The marriage tax allowance allows the non-tax paying partner to transfer £1,250 of their personal allowance (the amount you can earn tax-free each tax year) to their spouse or civil partner if they earn more.
If you are eligible, it will lower the higher earner’s tax bill for the tax year. In fact, you can also backdate your claim if it is successful.
Applying for the allowance is quick and free. Click here to view the designated page on the official HMRC website.
Who Is Eligible For The Marriage Tax Allowance Or Marriage Allowance?
You may apply if:
- You’re married or in a civil partnership (not just living together).
- One partner must be a non-taxpayer, meaning they earn less than the £12,500 personal allowance between 6 April 2020 and 5 April 2021.
- The other partner needs to be a basic 20% rate taxpayer, i.e; you’d need to earn less than £50,000 or if you live in Scotland, £43,430.
- To claim for Marriage Tax Allowance, one partner must have been born on or after 6 April 1935.
Ultimately, one of you must be a non-taxpayer and one must be a basic-rate taxpayer.
Are The Marriage Tax Allowance And Marriage Allowance Tax Breaks Worth It?
The tax breaks have received mixed reviews; Labour MP Jon Ashworth described the policy as ‘perverse and unfair’. Just to get this scheme up and running successfully, £2 million was spent on the advertising campaign alone to promote the policy with print, digital and radio adverts. Fiona Weir, chief executive of charity Gingerbread believes that ‘Public funds could be better spent on supporting the poorest families in society, whatever their marital status.’ This money would have been better spent elsewhere.
However, one thing is for sure – not enough people are aware that such breaks exist. While married couples or civil partnerships are the most common family type in the UK, more and more Brits are choosing to live together without a formal settlement – and as such, would not be able to take advantage of the tax break.
Though it should be encouraged that people take advantage of tax breaks when they are available, these, in particular, are offered with an arguably low level of allowance. This begs the question – is it really worth it?
In our view, with the allowances being free to apply for, it seems foolish not to benefit from them if you are eligible. Click here for the HMRC Marriage Allowance page. If you would like to keep ahead of the game and informed of alternative tax breaks or government benefits, why not speak to Stonehouse Accountants about starting a professional relationship with us?