Married couples are missing out on £1.3 million in unclaimed tax breaks, according to a freedom of information request from Royal London.
HMRC has admitted that as many as two million married couples and couples in civil partnerships are failing to claim the ‘marriage allowance’, which allows those who earn £11,500 or less a year to transfer £1,250 of their personal allowance to their spouse or civil partner if they earn between £11,501 and £45,000 (£43,000 in Scotland) each year.
This can cut your joint income tax bill by up to £230 each year.
The marriage allowance has been available since April 2015, and couples that are able to back date claims for three tax years would be able to save as much as £662 in tax, says Royal London.
When the policy was launched, HMRC estimated that 4.2 million couples would benefit, but so far only 2.2 million have claimed.
Commenting on the revelation, Steve Webb, director of policy at Royal London says: “The government has created a tax break specifically designed to benefit married couples and civil partners, but 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.”
How to claim the marriage tax allowance
To claim the marriage tax allowance, eligible couples need to apply online via Gov.uk.
The allowance will continue to be paid until either of you cancel it or your circumstances change.
You can apply via the same link above for claims to be backdated if necessary.