Published On: Tue, Aug 27th, 2019

Tax shock: How unmarried couples are losing £1150 to the taxman | Personal Finance | Finance

Marriage allowance lets married couples transfer £1,250 of their Personal Allowance to their partner, if they earn more than you, reducing their tax by up to £250 in the tax year. Sean McCann, a Chartered Financial Planner at NFU Mutual, claimed that as married couples can apply for allowance dating back to 2015, they could claim back “just over £1000” and even up to £1150. However, this allowance is only available to married couples and civil partners, and not to co-habiting couples.

Mr McCann told “The general point with co-habiting couples generally is that it’s a bit of a myth that people living together long term, particularly if they’ve got kids, gives them the same rights as married couples.

“Can be for some couples that are basically risking financial disaster by not taking some advice. For marriage allowance, that’s available to married couples and civil partners.

“So if one of them has income below £50,000 and one of them has income below £12,500, what they can do is they can use part of the non-taxpayers’ tax-free allowance, and this year it’s worth £250 to them.

“And they can go back quite a few years, back to 2015/16, so they could claim back just over £1000. They could actually claim back £1150.

“That’s something that isn’t available if you’re a co-habiting couple.”

READ MORE: Tax allowance: Do you and your partner qualify for £1,150 saving in tax?

Mr McCann added: “That allowance is only available to married couples and civil partners.

“So if you’re co-habiting, ie. not married, then you’re not going to get it.”

Marriage Allowance allows a person who doesn’t earn enough to be taxed at the Basic rate to transfer £1,250 of their Personal Allowance to their wife, husband, or civil partner who earns more, and pays tax at the basic rate.

This can then reduce the tax that’s payable by up to £250 per tax year – which spans from April 6 to April 5 the following year, according to

Income tax is not payable on the first £12,500 of a person’s income, due to this being covered in the standard Personal Allowance.

This means that for those whose income is less than the standard Personal Allowance, they may be able to reduce their partner’s tax payments.

If one person in the couple was born before April 6 1935, and Marriage Allowance is not claimed, they may be able to claim Married Couple’s Allowance – something which could reduce a tax bill by between £345 and £891.50 per year.

The Government website states: “To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance – this is usually £12,500.

“You can calculate how much tax you could save as a couple.

“You should call the Income Tax helpline instead if you receive other income such as dividends or savings.”

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