Couples could be missing out on a tax break worth more than £1,000 – and if they don’t act quickly it’s money they can never recover.
That’s because while you can claim back money you’ve overpaid in the past, you can only go back four years.
And as the tax break was introduced four years ago, couples who’ve been together that long will lose their first year’s allowance forever if they don’t put a claim in very soon.
Earlier this year HMRC estimated around 700,000 couples are eligible for the free tax break, which applies to anyone who’s married or in a civil partnership.
Victoria Todd from the Low Incomes Tax Reform Group explained: “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.”
Who can apply for the tax break
Since April 2015, most married couples and civil partners have been entitled to the ‘ marriage tax allowance ‘.
If one partner earns less than their annual tax allowance of £12,500 they can pass on a share of their remaining allowance to their partner – provided their other half earns between £12,500 and £50,000.
This allows the non-tax-payer in the relationship to transfer up to £1,250 of their personal allowance to their spouse, cutting their tax bill by up to £250 this year.
It only applies to couples that are married or in a civil partnership, and there are slightly different limits in Scotland.
You can apply for the Marriage Allowance online .
HMRC says it’s simple to apply and takes around 10 minutes to do it via gov.uk/marriage-allowance .
To apply, you’ll need details from your P60, bank account, National Insurance number, the three most recent payslips and your passport number to hand.
If you don’t have access to the internet or would prefer to speak to someone, call 0300 200 3300 – but be patient as they will try and push you online.
Just say Marriage Allowance when asked what you are calling about and stick with it and eventually you’ll get through to a real person.
Claiming for previous years
The tax break works retrospectively, meaning if you qualified at any point since 2015 – even if you don’t now – you are entitled to that money.
Couples could claim as much as £900 back for past years – on top of this year’s £250 – meaning there’s up to £1,150 up for grabs.
For past years you get a refund cheque from HMRC and for the current tax year and in the future your tax codes will be amended.
If you’re self-employed, the marriage allowance is dealt with as part of the Self Assessment tax return.
“Essentially, you can get the benefit of the marriage allowance on a backdated basis,” Todd said.
“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.”
If things change – for example you break up or your spouse becomes a higher rate taxpayer – you need to let HMRC know as you will no longer be eligible for the marriage allowance.
But you only have until 5 April next year to claim the first year’s allowance – worth £212 – or miss out, thanks to the four-year time limit 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,” Todd said.
Is there anything to watch out for?
HMRC says signing up is a single process that only takes a few minutes, but be careful of people offering to do this for you or “help”.
“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,” Todd warned.
“Tax refund companies sometimes charge fees of up to 40% or 50% 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.”