The Low Incomes Tax Reform Group (LITRG) is reminding couples that they have until this time next year (5 April 2020) to claim marriage allowance refunds dating back to the first tax year of the allowance, 2015/16.
The marriage allowance was introduced from 6 April 2015. It allows an individual to transfer 10 per cent of their personal allowance (£12,500 in 2019/20 so the amount transferred is £1,250) to their spouse or civil partner. Twenty per cent of this allowance is then given as a reduction in the recipient’s tax bill. In 2019/20, this can result in anything up to a £250 tax saving for the couple. There are various conditions to be met.1
Head of Team at LITRG Victoria Todd said:
“You can still claim to transfer the personal allowance for 2015/16 and subsequent tax years, even if you did not do it at the time. Essentially, you can get the benefit of the marriage allowance on a backdated basis.2 Remember you will only get the full benefit if the person giving up the allowance is not using it and the person receiving the tax reduction can use it.
“We remind couples that they have until 5 April 2020 to claim back to 2015/16 or they will miss out on that year. This is in line with the general four-year time limit3 that exists to claim a refund. If a claim is not made within the time limit you will lose out on any refund that may be due and the tax year becomes 'closed' to claims.
‘’We also warn couples that there are a lot of organisations out there who will offer to help you trigger your marriage allowance refund – but then will charge you a hefty fee. Tax refund companies sometimes charge fees of up to 40 per cent or 50 per cent of the value of the refund.
‘’This in itself is not illegal, but in the case of marriage allowance, it is simple and easy for a person to apply for their refund themselves without having to pay any fee at all. It could take a bit of time for HMRC to process, but the important thing to note is that tax refund companies don’t have an inside track with HMRC, so using one won’t speed things up.’’
How to claim a refund
The person giving up part of their personal allowance needs to make the claim and as part of doing this, can make claims for earlier years also.
There is a relatively straightforward online facility4 to do this on the GOV.UK website. To use it, you need to have your National Insurance number and prove your identity, such as by giving details from your P60, payslips, passport or child benefit. You also need the National Insurance number of your spouse or civil partner.
If you cannot claim online, you can telephone HMRC on 0300 200 3300 or write to them to make the claim.
For prior years, you will receive a refund cheque from HMRC. For the current tax year and going forward, your own and your spouse or civil partner’s tax codes will be amended. For the self-employed, the marriage allowance will be dealt with as part of the Self Assessment tax return.
If your circumstances change, such as you divorce or you or your spouse become a higher rate taxpayer, you should let HMRC know as you will no longer be eligible for the marriage allowance.
Notes for editors
1. The transferee does not receive an increased Personal Allowance as a result. See here for more information: https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-allowances-am-i-entitled#toc-what-is-the-marriage-allowance-
2. You will only get the full benefit if the person giving up the allowance is not using it and the person receiving the tax reduction can use it.
This can result in the couples being able to make the following tax savings, totalling up to £1,150:
2018/19 tax year: the personal allowance was £11,850, meaning £1,190 (rounded up) can be transferred (maximum £238 tax saving).
2017/18 tax year: the personal allowance was £11,500, meaning £1,150 can be transferred (maximum £230 tax saving).
2016/17 tax year: the personal allowance was £11,000, meaning £1,100 can be transferred (maximum £220 tax saving).
2015/16 tax year: the personal allowance was £10,600, meaning £1,060 can be transferred (maximum £212 tax saving).
You need to meet the criteria in respect of each year you apply for the allowance.
3. Time limits for claiming back tax
Tax year 2015/16 (year ended 5 April 2016) – claim by 5 April 2020
Tax year 2016/17 (year ended 5 April 2017) – claim by 5 April 2021
Tax year 2017/18 (year ended 5 April 2018) – claim by 5 April 2022
Tax year 2018/19 (year ended 5 April 2019) – claim by 5 April 2023
5. Low Incomes Tax Reform Group
The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk
Out of hours contact: George Crozier, 07740 477 374)