Tax refund: Couples urged to check eligibility and see if they could get up to £1,220 back

Martin Lewis discusses marriage tax allowance

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This year’s tax year end falls on Easter Monday, meaning many will want to ensure their financial endeavours are in order ahead of the bank holiday weekend. For some, this may include checking to see whether they can get a tax refund via the Marriage Allowance.

This is something which enables a person to this year transfer £1,250 of their Personal Allowance to their spouse or civil partner, meaning the couple can potentially end up paying less tax overall.

Ahead of the tax year end, Kay Ingram, Director of Public Policy at LEBC Group, has addressed the Marriage Allowance.

“Marriage Allowance enables married couples and civil partners to keep more of their income by transferring 10 percent of the personal allowance for income tax from one spouse/ partner to the other,” the chartered financial planner said.

“The Personal Allowance is the amount of income which a person can keep each year before they pay any Income Tax.

“Marriage Allowance is available where one spouse/civil partner is a non-taxpayer, with taxable income below the personal allowance of £12,570 and the other is a basic rate taxpayer, with taxable income between £12,570 and £50,270 (£43,662 if resident in Scotland).

“By transferring 10 percent of the allowance, the partner or spouse with the higher income can keep £1,257 more income with no tax to pay, saving up to £252 off their annual tax bill.”

Ahead of the tax year end, couples eligible for the Marriage Allowance are being urged to see if they can backdate their claim.

Those who can could end up getting a significant sum of up to £1,220 back.

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“Couples who are eligible may also backdate a claim for Marriage Allowance for up to the previous four tax years,” Ms Ingram said.

This is provided they were eligible for those tax years.

“A couple claiming for all four years and the current year could earn a tax refund of £1,220 which HMRC will pay within a few weeks of the claim.”

Different amounts are available for different tax years.

The chartered financial planner explained the earnings eligibility and amount available for each tax year is:

The Personal Allowance will rise in April 2021, ahead of a five-year freeze, following the coronavirus pandemic.

Various other tax allowances will be subject to a freeze, announced by Chancellor of the Exchequer Rishi Sunak during the 2021 Spring Budget.

Rachael Griffin, tax and financial planning expert at Quilter, said: “The various tax allowances and thresholds are great ways to incentivise people to save for their future, distribute their wealth and help establish a strong financial future.

“However, many of these have taken huge hits in recent years as subsequent governments look to claw back as much tax as possible.

“One could argue that these allowances and thresholds are never going to be as good again and will only get worse from here.

“The Chancellor recently outlined plans to freeze many of these tax allowances in order to start balancing the books to help pay for the pandemic response.

“As such, this is one of the most important ends to a tax year we can remember.

“It will be vital for individuals to utilise their tax allowances as much as they can now before they reset in April and take advantage of the situation today, rather than wait and think it will be the same one or two months from now.

“It is also worth remembering that many of these allowances have failed to keep up with inflation.

“Expectations are that inflation is going to rise as the economy reopens, so this will effectively decrease the levels in real terms over time. Putting money into a pension or gifting it to a family member now could make a real difference compared to waiting for the next tax year.”

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