This month saw the registration open for a new Marriage Tax Allowance that provides a tax break for married couples or those in civil partnerships. Chancellor of the Exchequer, George Osbourne, has called the new tax break “a recognition of marriage in our tax system”.
Who qualifies for the Married Couples Tax Break and how does it work?
The Married Couples Tax Break is available to spouses who earn less than £10,600 a year. The spouse earning less than this amount or not earning at all, can transfer the unused part of their tax free personal allowance (the amount you can earn without being required to pay tax – usually £10,000 a year) to their partner and reduce their overall tax liability by as much as £212 a year.
The only condition is that their partner must be a basic rate tax payer and his/her maximum income cannot exceed £42,385. The aforementioned income would include salary as well as any gains made via pensions or investment.
It is estimated that approximately four million married couples and 15,000 couples in civil partnerships are eligible for the Married Couples Tax Break. It is expected to provide a helping hand to the poorest families in the UK.
The ICAEW, on the other hand, has warned that the new tax break could result in these same families losing out on benefits entitlements and that in some ways, the government is giving with one hand, and taking away with the other. It is also of the opinion that this tax break further complicates an already overly complex tax system.
The Married Couples Tax Break is going to take effect from 6th April 2015. In order to apply for it, one simply has to register their interest in receiving the marriage allowance at https://www.gov.uk/marriage-allowance