Income Tax Transferable Allowance

From February 2017 Newsletter

With savings interest rates remaining low, it is worth investigating ways to improve your personal income. One option which may not be obvious concerns transferring one’s personal income tax allowance to a spouse or civil partner.

As the lower earner, the Inland Revenue ‘Marriage Allowance’ lets you transfer up to £1100 of your personal allowance to your husband, wife or civil partner – if they earn more than you. This reduces their tax by up to £220 in a tax year. To benefit as a couple, you (as the lower earner) must have an income of £11,000 or less. In most circumstances a claim can be backdated to 6 April 2016. To claim this allowance, you must be: -  married or in a civil partnership; don’t earn anything or your income is under £11,000; your partner’s income is between £11,000 and £43,000. This allowance can still be claimed even if you live abroad, as long as you get a taxable ‘Personal Allowance’.

Alternatively, it may be possible to claim for the ‘Married Couple’s Allowance’, which could also reduce your tax bill.  The criteria for claiming this allowance is: - you’re married or in a civil partnership; you’re ‘living’ with your spouse or civil partner; one of you was born before 6 April 1935.

For marriages before 5 December 2005, the husband’s income is used to work out Married Couple’s Allowance, and he gets the allowance. For marriage and civil partnerships after this date, it’s calculated on the spouse with the highest income, who then gets the allowance. You can still claim ‘Married Couples Allowance’ even if you are unable to live with your partner because of illness or old age e.g. where your partner is in residential care. You can elect to transfer the minimum amount of this tax allowance between the parties. 

Everyone’s tax affairs are singular and confidential and I would urge anyone interested in this topic to contact the Inland Revenue.

For full details and and how to apply check web page www.gov.uk/marriage-allowance-guide alternatively phone 03002003300 Monday/Friday 8.00am / 8.00pm and have your NI number available.