Couples could be missing out on tax breaks
Couples may be missing out on tax breaks without realising it, according to HM Revenue & Customs (HMRC).
Savings can be made both with Income Tax and Capital Gains Tax (CGT) by using their personal tax allowance.
For CGT, a couple’s two allowances (each equal to £12,300) can be combined to reduce the final tax bill on a transaction like selling a second home.
But for nearly two million couples who are married or in a civil relationship, the ‘Marriage Allowance’ can also be used and save up to £252 per annum in Income Tax.
This can be backdated to include any tax year since 5 April 2017. If your spouse or civil partner has since died, you can still claim.
If one partner earns below the Personal Allowance threshold of £12,570 and the other is a basic rate payer, then 10 per cent of the lower earner’s allowance can be transferred to the higher earner.
For the current tax year, that figure is £1,260, which means an annual tax saving of £252. Multiply this by the backdated four years and you could have a saving of £1,220.
For couples who have been together for many years, a change in circumstances like the effects of the COVID pandemic, where they may have lost a job but have found lower paid employment, could also mean they are now eligible.
Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “Marriage Allowance lets eligible couples share their Personal Allowances and reduce their tax by up to £252 a year. Nearly 1.8 million couples are already using the service – it is free, quick and easy to apply, just search ‘marriage allowance’ on GOV.UK.”
Claims are automatically renewed yearly but couples should notify HMRC if their circumstances change.
Visit GOV.UK to find out more about Marriage Allowance.
Link: 1.8 million couples benefitting from extra tax relief
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