Tax Breaks That Are Beneficial For The Married Couple

Newly passed tax allowances have been missed by married couples.  According to the Freedom of Information Bureau the insurer Royal London stated that over £1.3bn in allowances remain unclaimed by eligible married couples.

In 2015, a new Marriage Allowance was initiated to help married couples to allow any unused tax-free allowances to be transferred to married spouses who are higher earners.  Additional benefits of the allowance were that it was made available to people in civil unions and up to 10% of an unused allowance for an individual could be transferred.

For 2017 alone, this increased access to tax savings would save couples upwards of £230.  Couples who would have used the credit since it’s inception every year would have earned an additional £662 in total tax savings.

For eligible couples, the Marriage Allowance transfers up to £1,150 of a personal allowance to a husband, wife or civil partner as long as they are the higher earner.  This allowance can reduce a tax burden by £230 in the tax year.  The lower earner must earn £11,500 or less, and any claim can be retroactively backdated to 2015.  The couple’s higher earner must be between £11,500 and £45,000 annually.  Couples who receive a pension and living abroad receiving a personal allowance are also eligible.

Steve Webb, Director of Policy at Royal London stated, “The Government has created a tax break specifically designed to benefit married couples and civil partners, but the take-up of the new allowance is shocklingly low

“Even in the third year of operation, around two million couples who could benefit from the marriage allowance are not doing so.  When family finances are so tight, I would encourage every married couple to check whether they might be eligible, including for the last two years, as they could qualify.”

In 2015, the HMRC projected that nearly 4.2 million couples would benefit from the new tax allowance.  However, FOI has provided data that only 2.2 million couples have claimed the allowance to date.  FOI findings were that in 2015 only 644,916 couples claimed the allowance.  Nearly 1.2 million allowances were used in 2016, and just over 2.2 million in 2017.

While more and more couples used the tax allowance every year, this result means that two million couples are still eligible, but they have not yet claimed the allowance.  If these two million couples would retroactively apply for the allowance of £662 per couple then the total tax savings from allowance use would be £1.3bn.

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