State pensioners are being urged to get £252 back using a little known HMRC tax loophole.
Most people make use of something called the Marriage Allowance while they’re working and earning a wage, but it can actually be put into use when you’re a pensioner too, which could be worth as much as £252 a year back into your pocket.
This little – entirely legal – tax loophole is best used when one person earns most of the income for a couple and the other is on a low income (such as, in this case, a state pensioner).
The Marriage Allowance enables someone with a low income to transfer the rest of their unused tax allowance to their husband, wife or a civil partner.
For example, the first tax band is set a £12,570, so if someone earned, say, £10,000, but their partner earned £48,000, they could transfer some of their unused remaining allowance to their partner, thus reducing their tax bill, as long as they earn less than £50,270.
The state pension is currently £11,502 per year but this is only for those on the full new state pension who maxed out their National Insurance contributions. For those on the old basic state pension, or who have missed NI years, their total pension take-home will be even lower.
The Marriage Allowance lets you transfer up to £1,260 of your unused personal allowance to a partner, giving them a tax-free band of £13,830 instead of £12,570. It means that the partner would pay no tax at all on the first £13,830 they earn, instead of the first £12,570, equivalent to £252 a year back into the household budget for the state pensioner to spend.
You can also backdate your claim all the way to April 2020, meaning your partner’s tax bill will be reduced by the amount corresponding to the years you are backdating.
Gov.Uk explains: “Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.
This reduces their tax by up to £252 in the tax year (6 April to 5 April the next year).
“To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance – this is usually £12,570.
“When you transfer some of your Personal Allowance to your husband, wife or civil partner you might have to pay more tax yourself, but you could still pay less as a couple.”
