Transferable allowance for (some) married couples

  • Mark Morton
  • 20 November 2015 00:00

Some of your clients may have heard of this new possibility and now may be a good time ensure whether they can claim this new relief.

The relief

New rules are introduced which raise the prospect of a transferable married couples allowance for some. References to marriage also include civil partnerships.

An individual is entitled to a tax reduction for a tax year at the basic rate of tax on the transferable amount if a claim is made and:

  • the individual is married to a person who makes an election which is in force for the tax year;
  • the individual is not, for the relevant year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings;
  • the individual meets the requirements of s56 ITA 2007 (residence, etc.) for that year; and
  • neither the individual nor their spouse makes a claim for the tax year under ss45 or 46 ITA 2007 (married couple's allowance - marriages, etc. before/on or after 5 December 2005).

The transferable amount for 2015/16 is £1,060 and for subsequent tax years is 10% of the personal allowance for the tax year to which the reduction relates. The amount is to be rounded up to the nearest £10 where appropriate.

If an individual is entitled to a tax reduction, the personal allowance of the individual's spouse is reduced accordingly. If an individual who is entitled to a tax reduction for a tax year dies during that year, this rule is ignored.

Changes in circumstances

There are some complex rules to deal with changes in couples during a year and for time limits for claims. The main point to note, though, is that an individual is not entitled to more than one tax reduction for a tax year or to have more than one election for a tax year, regardless of whether the individual is a party to more than one marriage.

Tax is never simple, so forewarned is forearmed!

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