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Since the introduction of independent taxation in 1990, all individuals have been assessed for tax as separate persons.  This reform reversed a principle that had underpinned the tax system for almost two hundred years: that a married woman’s income was simply part of her husband’s income, and should be taxed as such.

As part of this reform a new tax allowance, the married couple’s allowance (MCA), was introduced. The MCA could be claimed by all married couples. In April 2000 the MCA was withdrawn from all couples, except those who had already reached the age of 65 or over. This remains the case. As a consequence only those couples in which one partner is at least 87 years old will be entitled to claim the MCA in the coming tax year (2021/22).[1]

In September 2013 the then Prime Minister, David Cameron, announced the introduction of a new transferable tax allowance for married couples and civil partners. From April 2015 spouses and partners would be allowed to transfer £1,000 of their own personal tax allowance to their partner, provided neither of them were higher rate taxpayers. In the March 2015 Budget it was confirmed that the personal allowance would be £10,500 for 2015/16, so that the ‘marriage allowance’, as it is sometimes called, would be set at £1,050. The allowance would be set at 10% of the personal allowance in future years.[2]

Initially eligible couples had to register online for the ‘marriage allowance’,[3] but may now apply by phone, using HMRC’s helpline for income tax queries on 0300 200 3300.[4] Couples who register after the beginning of the tax year are still be entitled to the full annual allowance. The general time limit for making a claim for repayment of overpaid tax is four years, so that eligible couples who have not claimed for the tax year 2016/17 will have until 5 April 2020 to do so.[5] In the Autumn 2017 Budget the Government announced that provision would be made to allow claims in cases where a partner has died before the claim was made. Claims may be backdated by up to 4 years.[6]

In the 2021 Budget the Chancellor Rishi Sunak confirmed that for the coming tax year, 2021/22, the personal allowance would be £12,570 and the ‘marriage allowance’ would be £1,260. As recipients use the transferred allowance to offset against their liability to basic rate tax, which is charged at 20%, the allowance may be worth up to £252.[7]

This note gives a short history of the withdrawal of the married couple’s allowance, and the introduction of the marriage allowance. A second Library paper discusses the development of the new marriage allowance, in the context of wider debates about the way in which the tax system treats married persons.[8]

Notes : 

[1]     For guidance see, HMRC, Married couple’s allowance, ret’d March 2021

[2]     HMRC, Transferable tax allowances for married couples and civil partners, 19 March 2014

[3]     HM Treasury press notice, Registration opens for new married couples tax break, 20 February 2015. For guidance see, HMRC, Marriage allowance, ret’d March 20201; and, Low Incomes Tax Reform Group, What tax allowances am I entitled to?, 12 March 2021.

[4]     Taxpayers may also make a claim through self assessment if they are already register and send tax returns, or by writing to HMRC (HMRC, Apply for marriage allowance, ret’d March 2021).

[5]     The deadline to claim the allowance back to its first year, 2015/16, was 5 April 2020 (see, Low Incomes Tax Reform Group press notice, A year left to claim full marriage allowance refund, 5 April 2019.

[6]     This change was announced in the 2017 Autumn Budget (HMRC, Income Tax: Marriage Allowance claims on behalf of deceased partners, 22 November 2017).

[7]     HM Treasury, Budget 2021: overview of tax legislation and rates, March 2021 (Annex A: Rates and Allowances).

[8]     Tax, marriage & transferable allowances, Commons Briefing Paper CBP 4392, 14 January 2019

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