1. ITV Report

Married couples missing out on 'more than £1.3 billion' by failing to claim tax break

Two million couples are not taking advantage of a new tax break. Credit: PA

Two million married couples eligible for a recently introduced tax break are missing out on as much as £662 a year by failing to claim it, according to HM Revenue and Customs (HMRC).

Only half of the 4.2 million eligible married or civil partnership couples are applying for the marriage allowance which was introduced in 2015/16, according to research by Royal London.

The allowance aims to help married couples and members of civil partnerships where one partner pays standard rate income tax and the other is a non-taxpayer.

The lower earner can transfer any unused tax-free allowance of up to 10% of the value of the full personal allowance to their higher-earning partner.

Royal London said that assuming each couple took advantage of the ability to backdate to 2015/16, two million couples could potentially have £662 each to gain.

Collectively, this could produce a total tax saving to consumers of more than £1.3 billion.

Can you apply for the marriage allowance?

Married couples can earn relief of up to £662. Credit: PA
  • The allowance allows you transfer £1,150 of your personal allowance to your husband, wife or civil partner.
  • It can reduce their tax by up to £230 every tax year
  • To benefit as a couple, you need to earn less than your partner and have an income of £11,500 or less.
  • Your partner’s income must be between £11,501 and £45,000 (£43,000 in Scotland) for you to be eligible

Sir Steve Webb, a former pensions minister who is now director of policy at Royal London, said: "The take-up of the new allowance is shockingly low. Even in its third year of operation, around two million couples who could benefit from the marriage allowance are not doing so.

"When family finances are so tight, I would encourage every married couple to check whether they might be eligible, including for the last two years, as they could qualify for a useful lump sum as well as a reduction in their ongoing tax bill."

A Government spokesman said: "2.2 million couples across the UK are keeping more of the money they earn thanks to the marriage allowance.

"Applications have increased year-on-year, the application process is easy and families can apply when convenient for them."