Insights

Starting from 6 April 2015, some married couples and civil partners will be eligible to claim Married Couples Relief and potentially save £212 each year. The transferable personal allowance will become operational from April, enabling spouses to transfer £1,060 of their unused personal allowance between each other. This means that if one spouse earns less than their £10,500 personal allowance and the other is a higher earner, they can offset their personal tax with a higher allowance.

However, strict eligibility rules apply and for couples where one spouse earns over the higher rate threshold, which for 2015/16 is £42,385, the transferable relief is not available. This will also affect single income households where one spouse earns above the threshold and the other has no income. In addition, in situations where both couples are earning, but their respective incomes are just above the personal allowance; there will be no remaining allowance to transfer. This applies even where a couple’s total income is lower than that of other eligible couples, where perhaps only one spouse is working. From the 2016/17 tax year, the transferable amount will be 10% of the personal allowance amount.

Married couples relief is expected to benefit around four million married couples and 15,000 civil partners. If you would like to find out more about qualifying please contact Lesley Stalker by emailing las@rjp.co.uk