UK households could boost their Personal Tax Allowance to £13,830 by taking advantage of a legal HMRC benefit, as explained by ITV’s Martin Lewis. While the standard Personal Tax Allowance is £12,570 per year, if one partner in a marriage doesn’t pay tax, they can transfer a slice of their allowance to their tax-paying spouse.
Explaining how it works, Martin said: “Each of you have your £12,570 Personal Allowance, that’s the amount you can earn each year that you don’t pay tax on. So the non-taxpayer can apply to gov.uk to move 10% of their tax-free allowance across to the basic rate taxpayer.
“The net result of that is the non-taxpayer now has a Personal Allowance of £11,310 and the taxpayer has a combined allowance of £13,830. That 10% extra, they would have paid tax on it at 20%, so the gain there is £252 a year.”
He also urged people to act swiftly, saying: “You need to do this quickly because the tax year ends on April 5. You can claim back up to four tax years if you’re eligible, which means a total gain of £1,258.
“For the current year, your tax code is altered, and for past years, you receive a cheque or bank transfer. So the Marriage Tax Allowance is absolutely crucial to do,” he said, reports Cambridgeshire Live.
HMRC’s website described how people can make the use of the benefit and which criteria they must to be able to increase their tax allowance.
It said: “To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance – this is usually £12,570.
“You can calculate how much tax you could save as a couple. You should call the Income Tax helpline instead if you receive other income such as dividends, savings or benefits from your job.
“You can also call if you do not know what your taxable income is. When you transfer some of your Personal Allowance to your husband, wife or civil partner you might have to pay more tax yourself, but you could still pay less as a couple..”