Marriage Allowance Explained: How Couples Can Save on UK Tax Bills

Marriage Allowance Explained: How Couples Can Save on UK Tax Bills

Introduction

In a time when every pound counts, many UK couples remain unaware of a simple way to legally reduce their tax bill. The Marriage Allowance is a valuable tax relief offered by HMRC that allows couples to save money each year. Yet, millions of eligible partners never claim it.

This blog post explains what the Marriage Allowance is, who qualifies, how much you can save, and how to apply. If you or your partner earns less than the personal allowance threshold, you might be eligible, and the savings can quickly add up.

What Is Marriage Allowance?

Marriage Allowance is a tax benefit for married couples and civil partners in the UK. It allows one partner who earns less than the personal tax-free allowance to transfer part of their allowance to the other partner.

In the 2025 tax year, the personal allowance remains at £12,570. If one partner earns less than this, they can transfer up to £1,260 of their unused allowance to their spouse or civil partner. This reduces the receiving partner's tax bill by up to £252 for the year.

It's important to note that this is only available if the higher-earning partner is a basic rate taxpayer, not a higher-rate or additional-rate taxpayer.

Eligibility Criteria

To qualify for Marriage Allowance, the following conditions must be met:

  1. You are married or in a civil partnership (living together does not qualify)
  2. One partner has an income below the personal allowance threshold (£12,570)
  3. The other partner is a basic rate taxpayer (earning between £12,571 and £50,270)
  4. Both individuals were born after 6 April 1935 (those born earlier may be eligible for Married Couple's Allowance instead)

This allowance is most beneficial when one partner has little or no income while the other is earning enough to use the extra tax-free amount.

How Much Can You Save?

As of 2025, the maximum you can transfer is £1,260. This can result in a tax saving of up to £252 per tax year. While this might seem modest, eligible couples can also backdate claims for up to four previous tax years, depending on when they became eligible.

That means couples who qualify but have not previously applied could potentially receive a refund of over £1,000.

Example:

  1. Partner A earns £10,000 (below the personal allowance)
  2. Partner B earns £30,000 (within the basic rate band)
  3. Partner A transfers £1,260 of unused allowance to Partner B
  4. Partner B pays £252 less in tax that year

The benefit is applied either through an adjusted PAYE code or self-assessment tax return.

How to Apply for Marriage Allowance

Applying for Marriage Allowance is free and easy. It can be done online through the HMRC website.

Here's how:

  1. Go to the official HMRC Marriage Allowance application page.
  2. The partner with the lower income applies to transfer part of their allowance.
  3. You'll need both National Insurance numbers and proof of identity.
  4. Once approved, HMRC will adjust the higher earner's tax code.
  5. Backdated claims will usually result in a refund via cheque or bank transfer.

You can also apply by phone or post if preferred, though online is the fastest and simplest option.

How Is It Paid or Reflected?

If you or your partner are employed, the tax benefit usually appears through a change in your PAYE tax code. If you complete a self-assessment tax return, the change will be reflected in your tax calculation.

Claims usually renew automatically each year unless your circumstances change.

Common Misconceptions

Many people confuse Marriage Allowance with the Married Couple's Allowance. These are two different schemes.

  1. Marriage Allowance is for couples where one partner earns under £12,570 and the other is a basic rate taxpayer.
  2. Married Couple's Allowance is only for couples where one partner was born before 6 April 1935.

Also, note that:

  1. Both partners must be UK tax residents
  2. It does not apply if both earn over the personal allowance
  3. It cannot be claimed if you are cohabiting but not legally married or in a civil partnership

If you're preparing your tax return and want to avoid common mistakes, be sure to read our guide: UK Tax Return Step-by-Step Guide 2025

Frequently Asked Questions

What if our income changes mid-year?

If the lower-earning partner's income increases above £12,570, or the other partner moves into a higher tax bracket, you may need to cancel the Marriage Allowance transfer. HMRC allows you to update your claim online.

Can we cancel the transfer?

Yes, either partner can cancel the Marriage Allowance claim through HMRC. You should do this if your situation changes, such as separation, divorce, or income changes.

What happens if we separate or divorce?

If you separate, you must cancel the Marriage Allowance claim immediately. HMRC will stop the transfer from the start of the next tax year.

Final Thoughts

The Marriage Allowance is an underused tax benefit that can make a meaningful difference, especially for couples where one partner earns significantly less. It is easy to apply for, can be backdated, and requires no ongoing paperwork once set up.

If you and your partner meet the criteria, it is worth checking your eligibility today. Over the years, the savings can add up, and all it takes is a simple application.