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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Individual records: PAYE records: marriage allowance

 

Introduction

From tax year 2015-16, Marriage Allowance recognises marriage and civil partnerships through the tax system by allowing qualifying couples to transfer 10% of their personal allowance to their spouse/civil partner.

In future years the transferred amount will increase in line with the annual increases to the personal allowance. If this 10% does not result in a multiple of £10 it will be rounded up to the nearest multiple of £10.

The transferor (the person giving up 10% of their allowance) will complete an online application and submit this securely to HMRC electronically through the Marriage Allowance digital service on the GOV.UK website. The application will be automatically processed and the transferor and the recipient (the person receiving the additional 10% transferred allowance) tax codes will be amended to reflect the transfer.

The recipient will benefit through a reduction in the amount of tax paid due to the transferred allowance.

The transfer will be more beneficial to those couples where one person has an income below their tax free personal allowance (currently £11,000 for tax year 2016-17), and their spouse/civil partner has an income above their tax free personal allowance but is not liable to tax above the basic rate.

 

Eligibility criteria

To qualify for the transfer:

  • you must be married or in a civil partnership when the transferor makes the application to transfer the allowance
  • your spouse/civil partner is not for the tax year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings
  • neither customer can already have a live Marriage Allowance application on their account at the time of the application
  • neither customer can be in receipt of Married Couple’s Allowance (MCA)

 

Verify

GOV.UK Verify is the new way to prove who you are online so you can use Government services safely. The verify service is a Government Digital Service (GDS) product, working with government departments, private sector and privacy consumer groups.

To verify their identity a customer will use GOV.UK where they will choose an identity provider to prove who they are online so that they can then access Government digital services safely and securely. This application process will take approximately 15 minutes to complete.

Further information can be found on GOV.UK.

 

Risk Triage

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Application process

An on-line application is HMRC’s preferred method for an eligible couple to apply for Marriage Allowance.

If this is the first time using the Government’s new digital services the transferor will have to verify their identity before they can access the online application. If they have already verified their identity for another digital service they won’t need to do this again and will already have the necessary credentials to access the online application.

Once a customer has verified their identity they will be directed to the online application to make the transfer.

The transferor will be asked to confirm that they are married or in a civil partnership, enter information relating to this and provide information about their spouse/civil partner (also known as the recipient). They will be asked to confirm the information entered and will be able to edit this if any mistakes have been made. Before they submit their digital application they will be prompted to confirm that they are not in receipt of Married Couples Allowance (MCA). When they have confirmed this information they can then submit the application to HMRC.

Once a transfer has been made via this route it will remain in place and be automatically carried forward into subsequent years or until there is a change of circumstances which will affect the transfer.

HMRC will also accept applications via telephone call or by letter as long as the relevant information is included

  • transferor’s name and National Insurance Number (NINO)
  • recipient’s name, NINO and gender.

Retrospective claims can be made after the end of a tax year but the couple must be married, or in a civil partnership at the time that the transferor makes the application and be married or in a civil partnership for all or part of that year they are making the retrospective claim for. In these circumstances the transfer will only be valid for that tax year and will not be carried forward into future years. Retrospective claims can be made separately on a year by year basis via the digital service.

The normal four-year limit for back-dated claims will apply in later years moving forwards from 2015-16. It is not possible to apply for Marriage Allowance for any year earlier than 2015-16. If a couple have subsequently divorced or, for a civil partnership there has been a legal separation, they will not be able to make back-dated claims as they need to be married or in a civil partnership at the time the transfer application is made.

 

Relationship

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Change of circumstances

These can be notified to HMRC through a number of channels such as:

  • online via the Multiple Digital Tax Platform
  • telephone
  • letter

Cancellation - only a transferor can notify HMRC of a cancellation to the Marriage Allowance relationship. A cancellation will close the relationship at the end of the tax year notified.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Bereavement - if one of the couple dies, action is dependent on which person within the relationship died

  • recipient dies - the transfer of Personal Allowance remains in place for the recipient until the end of the relevant tax year and the transferor receives the allowances back from the start of the relevant tax year
  • transferor dies - the transferor’s allowance remains at the reduced amount and the recipient retains the extra personal allowance until the end of that tax year

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Divorce / Legal Separation - Revoking a transfer where a marriage or civil partnership comes to a legal end.

For the purposes of a transfer, a marriage comes to a legal end where any of the following are made:

  • a decree absolute of divorce, a decree of nullity of or a decree of judicial separation, or
  • in Scotland, a decree of divorce, a declarator of nullity or a decree of separation

For the purposes of a transfer, a civil partnership comes to a legal end where any of the following are made:

  • a dissolution order or a nullity order, which has been made final
  • a separation order
  • in Scotland, a decree of dissolution, a declarator of nullity or a decree of separation

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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No Benefit - if the customer contacts us to say there is no benefit from the Marriage Allowance transfer then the transfer can be ended from the beginning of that tax year and both accounts will be updated.

Married Couples Allowance - if a customer is in receipt of Married Couples Allowance then they are not eligible for Marriage Allowance (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Higher Rate Taxpayer - if either customer is a higher rate taxpayer or becomes a higher rate taxpayer at the end of the year then they are not eligible to claim Marriage Allowance (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Reconciliation

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