UK households have personal tax allowance hiked to £14,000

People who backdate Marriage Tax Allowance can have their personal allowances hiked to over £14000. Those who are married or in a civil partnership who opt to use the HMRC perk can have their personal tax allowance upped to £14,064.

Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner. This reduces their tax by up to £252 in the tax year (6 April to 5 April the next year).

You can backdate your claim to include any tax year since 5 April 2020 that you were eligible for Marriage Allowance. Your partner’s tax bill will be reduced depending on the Personal Allowance rate for the years you’re backdating.

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If your partner has died since 5 April 2020 you can still claim - phone the Income Tax helpline. If your partner was the lower earner, the person responsible for managing their tax affairs needs to phone. When added to the personal tax allowance, you can get £14,000.

To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance - this is usually £12,570. 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.

On its website, HMRC gives an example, explaining: "Your income is £11,500 and your Personal Allowance is £12,570, so you do not pay tax. Your partner’s income is £20,000 and their Personal Allowance is £12,570, so they pay tax on £7,430 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,430.

"When you claim Marriage Allowance you transfer £1,260 of your Personal Allowance to your partner. Your Personal Allowance becomes £11,310 and your partner gets a ‘tax credit’ on £1,260 of their taxable income. This means you will now pay tax on £190, but your partner will only pay tax on £6,170. As a couple you benefit, as you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax."