Money expert Martin Lewis has revealed how to increase your Personal Allowance to £13,830 per year – but you have to be married for it to work.
Returning on the latest ‘marriage and divorce’ special of The Martin Lewis Money Show Live on ITV1 and ITVX, the Money Saving Expert founder set out how couples who have legally tied the knot can benefit from a tax perk.
Martin said there are more than 2.1M married people who can get up to £1,258 back and should file a claim for the money with HMRC – but need to claim by April 5.
Whether you’re married or in a civil partnership, including same-sex civil partnerships, you can apply to HMRC to move around your Personal Allowance thresholds, which can be worth as much as £1,258 in total, or £252 a year across five years that you can claim.
Everyone usually has a Personal Tax Allowance of £12,570 per year, which is the maximum amount you can earn before paying Income Tax. Every £1 you earn over that will see 20% taken away in tax.
But Martin explained how if one person in a married couple is a non-taxpayer – for example they may not work, may only volunteer, or be on unpaid maternity leave – then they could transfer some of their tax allowance to their partner.
Martin explained: “Each of you have your £12,570 Personal Allowance, that’s the amount you can earn each year that you don’t pay tax on.
“So the non-taxpayer can apply to gov.uk to move 10% of their tax-free allowance across to the basic rate taxpayer.
“The net result of that is the non-taxpayer now has a Personal Allowance of £11,310 and the taxpayer has a combined allowance of £13,830.
“That 10% extra, they would have paid tax on it at 20%, so the gain there is £252 a year.”
Martin warned that the deadline to apply is rapidly approaching, as the tax year ends on April 5.
He added: “You need to do this quickly because the tax year ends on April 5.
“You can claim back up to four tax years if you’re eligible, which means a total gain of £1,258.
“The way it works, for your current year your tax code is changed, for previous years they send you a cheque or bank transfer.
“So the Marriage Tax Allowance is absolutely crucial to do.”
Of course, this perk is only open to those who are married – unmarried couples, even those cohabiting, cannot take advantage of the tax break.
Martin added that the website where you apply is currently down for maintenance, but is due to come back on March 1, so either wait until March to apply or download and fill out the paper form instead.
He urged those who are eligible to get a claim in, adding: “Either, put in your diary now to do this on March 1, there are more than 2.1M eligible couples who are not claiming this who should be claiming this who could gain… or go onto gov.uk and download a form and post it in.”
