Another Benefit to Marriage!

Welcome to my second blog, where I felt I should be a bit more adviser focused and discuss an Allowance that was introduced fairly recently and that very few of the people I talk to are aware of.

We are approaching the end of the current tax year, so its vital that you make sure you put your finances in order and don’t leave things like allowances you can claim, ISA and Pension contributions until the last minute.

So are you one of the 3.7 million couples who are missing out on the £212 marriage tax allowance? or are you one of the 8% of married couples who have claimed it?

If you are thinking it is not worth applying for, keep in mind that if you are only getting 1% p.a on your savings you would need to have £21,200 in an account to generate this amount in interest!

So What is it? It’s a way for couples to transfer a proportion of their personal allowance to their spouse/civil partner.

Who can get it? The eligibility criteria is:

– You must be married or in a civil partnership

– One of you needs to be earning less than the personal allowance (£10,600 2015/16 and £11,000 2016/17) Excluding your tax free interest allowance.

– The Other one needs to be a basic rate tax payer.
– Both of you must have been born after 4th April 1935.

How does it work? The Partner who has an unused amount of personal allowance can transfer up to £1,060 of their allowance to their partner who is a basic rate tax payer.

So if Mary has pension income of £7,000 p.a. she can transfer £1,060 of her personal allowance to her husband John who has income of £30,000. This means that Johns personal allowance increases from £10,600 to £11,660 and he can have income of this amount at 0% tax before the 20% rate kicks in. This will save him £212 pa in tax.

How do we put this into practice? You will need to apply, using the following link https://www.gov.uk/marriage-allowance or you can call 0300 200 3300, you will need both of your National Insurance numbers and may be required to provide ID. Once you have applied you will be notified if you are eligible via an email. You can still apply before the 5th April to receive the allowance for this year.

Your personal allowance will automatically transfer every year to your partner until you cancel it. Remember if your circumstances change in the future you will need to advise HMRC.

If you would like more information about the Marriage Allowance or to discuss you personal situation then please feel free to contact me on 07767 308783 or email me at claire.blake@hoskinfinancial.co.uk

My next blog will follow soon, so I hope you will take a look but if anyone would like me to cover a particular topic them all suggestions are greatly received.

Remember I am always happy to discuss your circumstances over the phone or arrange a face to face meeting if you are based in the Essex/Hertfordshire Area.
Thanks for reading, all the best, Claire.

Claire Blake (Dip PFS)
Independent Financial Planner