As the end of the tax year approaches, millions of married couples and civil partners in the UK could be missing out on a significant tax break. Martin Lewis, the founder of MoneySavingExpert, is urging eligible households to check their Marriage Tax Allowance status before the looming April deadline, or risk losing out on savings of up to £1,260.
The Marriage Tax Allowance is a simple way for couples to reduce their overall tax bill, but according to Lewis, around two million households are unaware they could benefit from it. The warning highlights a common missed opportunity as many couples fail to realise the financial advantages of this scheme. It is essential to apply before the end of the tax year to ensure access to potential backdated payments.
What Is the Marriage Tax Allowance?
The Marriage Tax Allowance enables a lower-earning partner to transfer a portion of their unused Personal Allowance to their spouse, provided they meet specific income criteria. According to Martin Lewis, the lower-earning partner must earn less than the £12,570 tax-free threshold, while the higher-earning partner must be a basic-rate taxpayer with an income of £50,270 or less. When the transfer is made, the lower earner’s allowance reduces from £12,570 to £11,310, and the higher earner’s allowance increases from £12,570 to £13,830.
This adjustment provides an annual saving of up to £252, which may seem modest but adds up over several years. The allowance applies to both working couples and retired individuals, as pensions are considered income in this context. Despite its simplicity, many eligible couples do not claim this allowance, often due to a lack of awareness.
Why Are So Many Couples Missing Out?
The biggest reason that so many couples fail to claim the Marriage Tax Allowance is their lack of understanding of the scheme’s backdating feature. According to Martin Lewis, couples can apply for the allowance up to four years after they become eligible. This means that those who have never claimed the allowance could receive a lump sum of up to £1,260, depending on how long they have been eligible.
The form to apply is straightforward and can be found on the Government’s website. Despite the potential financial benefit, many people are unaware of this scheme or mistakenly believe they do not qualify.
Retired couples, in particular, are often left out, as they may not realise that pensions count towards the income threshold for this allowance. Furthermore, non-taxpayers earning between £11,310 and £12,570 should be careful before applying, as transferring the allowance could cause them to lose out due to the way their tax position changes.
The Marriage Tax Allowance provides a clear example of how even small, often overlooked, tax breaks can help boost household finances. As Martin Lewis continues to advocate for more people to check their eligibility, the message remains clear: don’t miss out on what is rightfully yours.
