Yahoo Finance Two million couples lose £662 windfall by failing to claim marriage tax break
Millions of married couples are missing out on as much as £662 because they are not claiming recently introduced tax breaks.
Figures released by HMRC under the Freedom of Information Act show that, while take-up is growing, around two million couples are missing out on the “marriage allowance”, which was introduced in 2015.
The allowance applies to married couples, and those in civil partnerships, where one partner is a basic-rate, 20pc, taxpayer and the other is not paying tax.
It allows the non-taxpayer, who must be earning less than £11,500 a year, to transfer up to £1,150 of their unused tax-free allowance to their other half.
At current rates the tax break is worth £230 per couple per year, but the claim can be backdated for the past two financial years, saving you £662 in total.
Uptake has risen from in 644,916 people in 2015-16 to 2.2 million this year. When the policy was introduced HMRC estimated that 4.2 million couples would be eligible, meaning there are still 2 million people failing to claim. That means families are collectively missing out on £1.3bn.
Steve Webb, director at insurer Royal London, which conducted the research, said: “The take-up of the new allowance is shockingly low. Even in its 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 past two years, as they could qualify for a useful lump sum as well as a reduction in their ongoing tax bill.”
Couples can apply for the allowance online and will need to provide a National Insurance number for both partners as well as another form of ID from a given list.
You can backdate your claim to when the allowance was introduced in 2015, but to be eligible for previous years you must satisfy the criteria at the time. This means the lower earner must have been earning less than £11,000 last year and £10,600 the year before, and the higher earner must have been a basic-rate taxpayer for all the years they are claiming for.
Couples have up to four years to claim backdated allowances.
HMRC said earlier this year it has stepped up its marketing campaign to ensure people do not miss out. The marriage allowance will automatically renew every year until you stop it, or your circumstances change, due to death or divorce, for example.
Cohabiting couples miss out regardless of how long they have been together, as do couples where one is a higher-rate, 40pc, taxpayer. If the lowest earner brings in more than the tax-free personal allowance they also miss out as only unused allowances can be transferred.
