A personal blog about life, business and money – not to be regarded as Financial Advice
In part one we looked at checking your tax code. Read on for…
2. Marriage Allowance
There is a way for a married (or civil partnered) couple to share some of their personal allowance using what HMRC call the Marriage allowance.
Marriage allowance is for couples where one partner who earns below the personal allowance of £11,850, donates 10% of their allowance to their partner – who must be a basic-rate taxpayer.
This can be particularly useful if one person stays home to care for children or works part-time and the other is working full-time but is also useful in retirement if one person has more pension income than the other.
The higher earning spouse receives a tax credit, which reduces the amount of income tax they pay. Overall, you could be about £238 a year better off as a couple if you are able to take advantage of this, and it can be backdated to April 2015.
The person ‘giving’ the allowance needs to go online to the gov.uk website and complete a form to do this. You will need both National Insurance numbers and personal details to do this including proof of ID.
Once you have done this, HMRC will adjust your tax code and you will end up with a code ending in N or M depending on whether you have given or received the allowance. Yourtake-homee pay will be adjusted if you are employed, or if you are self-employed you will benefit from the change when you complete your tax-return.