House of Commons Library

Income tax allowances for married couples

Published Monday, September 9, 2019

In general married couples are taxed as individuals, though a minority of older couples & civil partners may still claim a 'married couple's allowance'. Since 6 April 2015 individuals have been entitled to transfer part of their personal tax allowance to their spouse or civil partner, if neither they nor their partner are higher rate taxpayers.

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Since the introduction of independent taxation in 1990, all individuals have been assessed for tax as separate persons.  This reform reversed a principle that had underpinned the tax system for almost two hundred years: that a married woman’s income was simply part of her husband’s income, and should be taxed as such.

As part of this reform the then Conservative Government introduced a new tax allowance – the married couple’s allowance (MCA) – which could be claimed by all married couples. In April 2000 the MCA was withdrawn from all couples, except those who had already reached the age of 65 or over. This remains the case. As a consequence only those couples in which one partner is at least 85 years old in this tax year (2019/20) is entitled to claim the MCA.[1]

In 2005 the then Labour Government confirmed that civil partners would be treated the same as married couples for tax purposes, so that, with the introduction of this legal status, civil partners have been entitled to claim the MCA, provided – as with married couples – one partner was born before 6 April 1935.

In September 2013 the then Prime Minister, David Cameron, announced the introduction of a new transferable tax allowance for married couples and civil partners. From April 2015 spouses and partners would be allowed to transfer £1,000 of their own personal tax allowance to their partner, provided neither of them were higher rate taxpayers. In the March 2015 Budget it was confirmed that the personal allowance would be £10,500 for 2015/16, so that the ‘marriage allowance’, as it is sometimes called, would be set at £1,050. The allowance would be set at 10% of the personal allowance in future years.[2]

Initially eligible couples were required to register online for the ‘marriage allowance’,[3] but taxpayers can now do so by calling HMRC’s helpline on 0300 200 3300.[4] Couples who register after the beginning of the tax year are still be entitled to the full annual allowance. The general time limit for making a claim for repayment of overpaid tax is four years, so that eligible couples who have not claimed for the tax year 2015/16 will have until 5 April 2020 to do so.[5]

In the 2018 Budget the then Chancellor Philip Hammond, announced that the personal allowance would be £12,500 from April 2019, and the ‘marriage allowance’ would be £1,250 for 2019/20. As recipients use the transferred allowance to offset against their liability to basic rate tax, which is charged at 20%, the allowance may be worth up to £250.[6] Prior to this, the Government had amended the statutory provisions for the allowance, to allow claims in cases where a partner has died before the claim was made; claims may be backdated by up to 4 years.[7]

This note gives a short history of the withdrawal of the married couple’s allowance, and the introduction of the marriage allowance. A second Library paper discusses the development of the new marriage allowance, in the context of wider debates about the way in which the tax system treats married persons.[8]

Notes : 

[1]    HM Revenue & Customs (HMRC) publish guidance for claimants on its site.

[2]    HMRC, Transferable tax allowances for married couples and civil partners, 19 March 2014

[3]    HM Treasury press notice, Registration opens for new married couples tax break, 20 February 2015. Details are on HMRC’s site. For more guidance see, Low Incomes Tax Reform Group, What tax allowances am I entitled to?, September 2019.

[4]    PQ14045, 3 November 2015. The line is open 8am to 8pm, Monday to Friday, and, 8am to 4pm Saturday.

[5]    PQ4733, 6 July 2015; PQ28276, 3 March 2016; Low Incomes Tax Reform Group press notice, A year left to claim full marriage allowance refund, 5 April 2019.

[6]    Budget 2018, HC 1629, October 2018 para 3.7; Annex A (Rates and allowances) in HM Treasury, Overview of tax legislation and rates, 29 October 2019.

[7]    This change was announced in the 2017 Autumn Budget (HMRC, Income Tax: Marriage Allowance claims on behalf of deceased partners, 22 November 2017).

[8]    Tax, marriage & transferable allowances, Commons Briefing Paper CBP 4392, 14 January 2019

Commons Briefing papers SN00870

Author: Antony Seely

Topics: Marriage, Taxation

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