What You Need To Know About Marriage Allowance
Transferring Personal Allowance Between Spouses in the UK
Tax planning is an integral part of financial management for any household, and for married couples in the UK, there’s a valuable strategy that can help optimise tax liabilities—transferring a portion of the personal allowance between spouses.
Personal Allowance is the amount of income an individual can earn each tax year without paying income tax. As of the current tax year (2024/25), the standard Personal Allowance in the UK is £12,570.
However, not everyone utilises their full allowance, especially if one spouse earns significantly less than the other or if one spouse doesn’t earn any income at all.
HMRC introduced the Marriage Allowance, which allows couples to transfer a portion of their Personal Allowance to their spouse or civil partner under certain conditions.
For the 2023/2024 and 2024/2025 tax years, the transferable amount is £1,260.
This means that if one spouse earns less than their Personal Allowance, and the other spouse is a basic rate taxpayer, they can transfer £1,260 of their unused allowance to their partner, effectively reducing the tax bill of the higher-earning spouse.
To be eligible for the Marriage Allowance, certain conditions must be met:
Marriage or Civil Partnership: The couple must be married or in a civil partnership recognised by the UK.
Income Levels: The lower-earning spouse must have an income below the Personal Allowance threshold (£12,570 in 2024/25), and the higher-earning spouse must be a basic rate taxpayer (earning between £12,571 and £50,270 in 2024/25).
Application Process: The lower-earning spouse needs to apply for the Marriage Allowance online through HMRC’s website. They will need both their own and their partner’s National Insurance numbers and proof of identity.
If both submit a self-assessment tax return, then the personal allowance can be transferred between spouses through their self-assessment return.
If this is something you think you and your spouse qualify for, please get in contact with us, and we will happily talk you through this and assist you if you wish.