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Tax break for couples now able to shift unused tax allowance between spouses

Register your interest in the new Marriage Allowance and reduce your partner's tax by up to £212 by transferring to them some of your personal allowance.

Under the UK tax system most people are allowed to receive a certain amount of income before tax is payable. This is known as the basic personal allowance. For the tax year 2015/16 the basic personal allowance is £10,600.

Married couples and civil partners, where one person earns less than the personal allowance, will be allowed to transfer up to £1,060 (10%) of their unused allowance to their partner, reducing their tax bill for the year.

You can transfer £1,060 of your personal allowance to your spouse or civil partner if:

• your annual income is £10,600 or less
• your partner's income is between £10,601 and £42,385
• you were born on or after 6 April 1935

This will reduce the amount of tax your partner has to pay for the year ended 5th April 2016.

The plans were first announced by Prime Minister David Cameron in 2013 and published in the 2014 Budget but didn’t come into force until 6th April 2015. People can register at any time during the current tax year and will still receive the full benefit of the allowance.

Chancellor George Osborne says “we made a promise to introduce a recognition of marriage into our tax and now we are delivering on that promise”.

We believe that this would be applicable to couples of pensionable age where a spouse’s State Retirement Pension is less than £10,600 or alternatively where a spouse is not working and has no taxable income or where there taxable income from part time employment is less than £10,600.

HMRC advise that applying online to register an interest is straightforward at https://www.gov.uk/marriage-allowance/how-it-works.

However, if you would like to discuss this matter in more detail or would like assistance in transferring your unused allowance then please do not hesitate in contacting me or your usual Moore contact.

[email protected]
Tax Manager
Southampton Office
Tel: 023 8082 1523