UK taxpayers get a tax-free standard personal allowance that changes every year; however, people in certain circumstances can boost this sum. Currently, the marriage allowance permits married couples to transfer £1,250 of their personal allowance to a lower-earning partner, meaning that their tax bill can be reduced by up to £250 in the tax year. Saying “I do” is therefore advantageous financially, with couples who are unmarried unable to claim the sums that are available to married couples and those in civil partnerships.
How much tax can you save?
Income tax is not applicable to the first £12,500 of a person’s income, with this threshold rising each year. The amount of tax paid above this sum depends upon in which band it falls. A taxable income of between £12,501 and £50,000 is taxed at the basic rate, which is currently 20 percent. For any taxable income above £50,000 and below £150,000, the rate of tax is currently 40 percent. A 45 percent tax rule is currently applied to all taxable income above this sum.
To benefit from this tax move as a couple, the lower earner must have an income amount below the personal allowance; as mentioned above, this is £12,500 in the current tax year. It is possible to backdate the claim, so this is an added incentive for couples who are married. The claim can be backdated to 2015; this year, the benefit is worth £250.
Tax advisers can assist with claiming back tax and will often use software to simplify and streamline the process. There is a range of software for financial advisors on the market from providers such as www.intelliflo.com.
Getting married means you are better off in a variety of ways
According to the Telegraph, getting married will leave you better off in various ways. One of the biggest advantages is the ability to pass on assets following death without incurring any penalties in the form of inheritance tax.
To benefit from the marriage allowance, couples can register their interest via the government website and HMRC will get in touch to discuss the next stage; however, some people believe that the process is a lot more complicated. There is also the disadvantage that many couples will not qualify for the incentive.