Married couples and civil partners have been urged to check if they can benefit from an HMRC rule that could cut their tax bills by hundreds of pounds per year. While weddings can usually be expensive, this HM Revenue & Customs (HMRC) allowance could provide couples with some financial relief.
The marriage allowance means civil partners and spouses can save up to £252 per tax year. Over a lifetime, these couples could save thousands of pounds through tax-free asset transfers. Clare Stinton, senior personal finance analyst at financial services company Hargreaves Lansdown, said: “This time of year usually marks the start of wedding season. But while wedding bells are ringing, fewer couples are saying ‘I do.’ More are choosing cohabitation, but skipping the aisle can be costly when it comes to money, tax and long-term financial security.”
The allowance is available to married couples where one partner is a non-taxpayer earning under £12,570 per year, and the other partner is a basic-rate taxpayer earning up to £50,270 per year.
The non-earner or lower earner can transfer up to £1,260 of their annual personal allowance to the partner who earns more.
This means these couples will see an increase in their tax-free allowance from £12,570 to up to £13,830, reducing the income they have to pay tax on.
These couples can claim further if they can backdate the claim up to four years. As long as they meet the criteria for each tax year, they can claim back up to £1,260.
It should be noted that when a portion of a person’s personal allowance is transferred to their partner, the individual might have to pay more tax themselves. However, as a couple, they could still pay less overall.
Eligible couples can also benefit from other tax advantages, such as unlimited asset transfers and inherited nil-rate bands, if applicable, to save on inheritance tax.
Ms Stinton continued: “Tying the knot unlocks financial advantages – in particular, tax perks. Benefits that unmarried couples simply don’t have access to, no matter how long they’ve lived together, regardless of shared bills, or whether they have children.
“Being married – including civil partnership – in the eyes of the law, provides tax-free allowances, inheritance tax benefits and clearer rules around the division of assets for partners and any children, that cohabiting alone doesn’t offer.”