The simple task that will save you £250 every year

When you say “I do”, you typically make a raft of promises to your partner – and are promised an array of benefits in return. You and your spouse pledge to be by each others’ side for better or for worse, and to look after one another in sickness and in health. 

There are long-term lifestyle benefits: research shows that married people tend to have healthier living habits, such as eating more healthily, exercising regularly and drinking more water.

But there are some benefits from signing on the dotted line that are more tangible in pounds and pence terms. In fact, there is one marriage benefit that can save you £250 – every single year. Here’s what you need to know.

What is ‘marriage allowance’?

Marriage allowance is a tax perk for couples who are married or in a civil partnership. 

The idea is that if one person is a low earner or does not work (and therefore does not benefit from their entire tax-free personal allowance) they can transfer some of that tax-free allowance to their spouse or partner.

It is thought that more than two million eligible couples miss out on this tax-break, despite it being free and easy to apply for.

Do I qualify for marriage allowance?

Married couples or civil partners can qualify for marriage allowance if one partner earns less than £12,570 (the personal allowance), and the other earns between £12,571 and £50,270 (the basic tax rate). 

The rules are slightly different in Scotland, where the higher earning partner must pay the starter, basic or intermediate rate of tax, which means that their income is between £12,571 or £43,662. The lower earning partner must still earn less than £12,570.

How does marriage allowance work?

If you are the lower earner, you can effectively transfer 10pc of your tax-free personal allowance to your partner. 

In all cases, you have to transfer £1,260 of your allowance, which effectively reduces your own tax-free personal allowance to £11,310. Assuming you weren’t using this portion of your tax-free allowance, it can instead be put to use in reducing your partner’s tax bill – reducing your income tax bill as a couple by a maximum of £252 in the 2024-25 tax year. 

Say you earn £11,500 and your partner earns £20,000. You earn less than the personal allowance, so pay no income tax. Your partner pays 20pc tax on the £7,430 above their personal allowance, so has an income tax bill of £1,486.

If you signed up for marriage allowance, you would effectively transfer £1,260 of your personal allowance to your partner. Your personal allowance becomes £11,310, whereas your partner can earn up to £13,830 before tax.

As your income now exceeds your new reduced personal allowance, you’d actually pay more tax, owing 20pc tax on £190 for a tax bill of £38. However, your partner’s taxable income will have dropped from £7,430 to £6,170, meaning their tax bill will fall from £1,486 to £1,234.

When you add your £38, as a couple your overall income tax bill comes to £1,272 – a saving of £214 compared to the £1,486 tax bill before marriage allowance was claimed.

Who does not qualify for marriage allowance?

It goes without saying that any couple that does not fall into the main qualifying category (married or in a civil partnership and with the required income levels) will not qualify for marriage allowance. Note that the income requirement doesn’t only factor in money earned from employment, so if you receive income from dividends or rental income that takes you both over the personal allowance, you might find you’re not eligible to claim.

But those born on or before April 6, 1935 also do not qualify for marriage allowance, and will instead be able to claim married couple’s (and civil partner’s) allowance. If one of you was born before this date, you could qualify for this – more generous – allowance instead.

This allowance could reduce your tax bill by between £401 and £1,037.50 a year, and you can claim it through a self assessment form or by contacting HMRC with details of your marriage or civil partnership.

Is it always worth claiming marriage allowance?

Maybe not. If the lower earner has an income that is close to the personal allowance threshold of £12,570, and the higher earner only earns slightly more than this threshold, claiming marriage allowance could actually leave you out of pocket.

Say the lower earner has an income of £12,000 and the higher earner earns £13,000. Combined, you would have a tax bill of £86.

If you claim marriage allowance – and £1,260 of the lower earner’s personal allowance is transferred to the higher earner – then the lower earner would have a personal allowance of £11,310 and the higher earner has a personal allowance of £14,570.

The lower earner would earn £690 more than their personal allowance, so will pay £138 in income tax. The higher earner will not pay any income tax, because their personal allowance is now higher than their income.

As a couple, their tax bill would be £52 more expensive.

How do you claim marriage allowance?

If you think you’re eligible, you can apply to HMRC directly online, for free – it won’t be automatically applied. 

The person who earns the least should make the claim. If you both just have earnings, this should be easy to work out. If you also get income from dividends or savings, you will need to do the sums to see who has the lower income.

Head to Gov.uk’s online application page and be sure to have both your National Insurance numbers and ID requirements to hand. If you would rather not apply online, you can do so through self assessment, or fill in and post a marriage allowance form (which you can download from the government website).

If successful, both your tax codes should change (if you are both earners), and you should see the extra money in your take-home pay.

You are responsible for cancelling marriage allowance if your circumstances change – for instance, if you legally separate or your income changes – so make sure to keep HMRC informed.

I’ve missed out on marriage allowance for years, can I backdate it?

Yes, you can backdate your claim for up to four years. If you were eligible for this whole period of time, you could get back more than £1,250.

You should not have to make any special request for this – HMRC should automatically backdate your claim if you qualify. 

It will take around two weeks for the money to be with you, and you can choose either bank transfer or cheque. It is likely to take longer if you have submitted the form by post.

Can you claim marriage allowance if you’re retired?

Marriage allowance applies to all taxable income, so it includes your pension as well as any income from savings or dividends.

This means that you can claim marriage allowance if your pension income falls within the qualifying parameters – one of you has an income of less than the personal allowance, and one of you is a basic-rate taxpayer.

As long as you are not receiving an income from any savings and investments that would affect your tax bracket, it shouldn’t matter if you have a large pension pot or ample savings sitting elsewhere. You will still qualify if you have chosen to receive a smaller income.

One thing to note is that the new full state pension, which is rising to £11,502.40 a year for the 2024-25 tax year, could well increase above the personal allowance limit in the next few years if thresholds remain frozen and the state pension keeps increasing.

It is already above the reduced personal allowance someone would receive if they transferred £1,260 to their spouse. If they did this, and had the full new state pension as their only income, they’d have to pay £38.48 in tax.

If the personal allowance remains frozen, this could soon impact your ability to claim marriage allowance. Or, if just one of you gets the full state pension, it could make it more important to claim the tax relief.