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6th April, the date set for the New Marriage Allowance

  

More than four million couples could be up to £212 a year better off* when the new Marriage Allowance is unveiled on 6th April.

The new allowance will allow those who earn a low or no income to pass on a proportion of their unused personal allowance to their more heavily taxed marital or civil partners. The personal allowance, i.e. the amount that you can earn before paying any income tax, is rising to £10,600 in 2015/16. So, in simple terms a non-working spouse could transfer away 10% of this, reducing the amount of tax their spouse pays. The new Marriage Allowance is expected to benefit many families, in particular those where one adult is unable to work because they care for children, vulnerable or elderly people.

How the Marriage Allowance works

 

If one partner earns less than their annual personal allowance of £10,600 (from all sources e.g. income, plus pensions, savings and investments) they can chose to pass on a share of that unused allowance to their partner. Up to £1,060 can be passed on to a spouse or partner if they have an annual income of between £10,601 and £42,385 (i.e. if they are a basic rate tax payer). You have to be married or in a civil partnership to benefit and both parties born after 6th April 1935; co-habiting partners are not eligible.

Currently those who think they may be eligible for the tax relief can pre-register interest in the new Marriage Allowance via the gov.uk website. Applicants will then be contacted by HMRC after April 6 to progress their application. The recipient will receive a change to their Pay As You Earn (PAYE) tax code.

Those without access to the internet will be able to go through the process by telephone (there is currently no dedicated phone number) but not until later this summer. HMRC have said that no one will lose out as couples have until April 6, 2016 to apply.

If you are interested in finding out how you can make your financial planning arrangements become more tax efficient please do not hesitate to get in touch. We'd love to hear from you, email letstalk@sanlam.co.uk. 

*Source Mirror 23 March 2015, Tricia Phillips

If you would like to review your investments and next year’s allowances, please do not hesitate to get in touch. We'd love to hear from you, email letstalk@sanlam.co.uk.

Date issued: 02.04.15

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependant upon individual client circumstances and may be subject to change.

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Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.