Paul Lewis
One partner in these older couples is entitled to a deduction off their tax called Married Couple’s Allowance. It is £6,965 a year but is worth only 10% of that so those who qualify normally get £696.50 as a straight deduction off their tax for the year.
The allowance is normally given by an adjustment to the entitled person’s tax code. But for some reason the Revenue computer is giving a lot of people half the amount it should. That has happened to many people who have been given the correct allowance for years. It is a simple mistake – though its cause remains a mystery – and a call to the Revenue will normally put it right.
Needless to say there are some complexities to this allowance. It is given to the husband if the couple qualified before 5 December 2005. But his wife can choose to have up to £133.50 of it off her own tax bill for the year. And with her husband’s agreement she can choose to have £267. He will get less of course.
For couples who first qualified on 5 December 2005 or later the allowance should automatically be given to the partner with the higher income. But the other partner can make the same choices about having a share of it.
Those choices need to be made before the start of the tax year so it is too late for 2010/11 but choose now and you will get it off your next year’s tax.
Any partner who is entitled to the allowance but has insufficient income to make use of it can choose to give the unused part of it – right up to the full amount – to their spouse or partner. They can choose to do that at any time and can look back to 2004/05 to get their tax reduced.
You can get the allowance even if you have married recently as long as at least one of you was born before 6 April 1935. In the year you marry you will get a reduced amount.
One final warning. The allowance can be reduced if the entitled spouse or partner has an income above £29,230. But it is never reduced below £2,670 which is worth £267 off the tax bill.
Written by Paul Lewis, this article was first published on July 8, 2010. Paul's opinions are his own and for general information only. Always seek independent, professional, financial advice.