Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Coding: coding: general principles: married couples and civil partners: date of marriage or civil partnership on or after 5 December 2005

The Civil Partnership Act 2004 came into effect on 5 December 2005. The Act allows same sex couples to form a legally recognised civil partnership with the same rights and responsibilities as those enjoyed by opposite sex couples who choose to marry. A civil partnership must be legally registered under the Civil Partnership Act 2004.

For marriages occurring before 5 December 2005 we gave the Married Couple’s allowance in the first instance to the husband where either he or his wife were born before 6 April 1935.

For new marriages and civil partnerships formed on or after 5 December 2005 the Married Couple’s allowance is given to the spouse or civil partner who has the higher income and the spouse or civil partner were born before 6 April 1935.

We will continue to call the allowance Married Couple’s allowance but the allowance will be entered in the income, allowances, benefits and deductions area under the ‘Marriages / Civil Partnerships on or after 5 December 2005.

On the 10 December 2014 legislation came in to affect enabling couples to convert their existing civil partnership to a marriage. The date of marriage will continue to be the date the civil partnership was formed.

Note: You must not use the term ‘Married Couple’s and Civil Partnership allowance’ in correspondence or when you are speaking to an individual or their agent. You must always refer to the ‘Married Couple’s allowance’ when you are dealing with individuals and their agents.

Specific areas where you need to take care include

  • Coding in the year of marriage or civil partnership
  • Transferring surplus allowances between married couples and civil partners
  • Separation
  • Death of a spouse or civil partner

The remainder of this subject is presented as follows

Full instructions are included at PAYE10010.

Note: Check if the spouse or civil partner of the highest earner is in an older age band for age-related allowance purposes. If they are, you must review the age-related allowances that are due to the highest earner.

Cases may arise where an individual is entitled to receive the Married Couple’s allowance by virtue of their spouse or civil partner’s date of birth, but does not qualify for age-related personal allowances, due to their own date of birth. Where a younger spouse receives a reduced amount of Married Couple’s allowance as a result of their income, if the case is not appropriate to SA, you must ensure the ‘Inhibit Automatic Reconciliation’ signal is set, see PAYE93015.

This is to ensure the reconciliation can be manually calculated. NPS will not automatically calculate any reduction to the allowance when the tax year is reconciled.

Coding for year of marriage or civil partnership

In the year of marriage or civil partnership the Married Couple’s allowance is reduced by one twelfth for each complete tax month before the date of marriage or civil partnership. When you have calculated the allowance due

  • Enter the date of marriage / civil partnership in the Maintain Individual area (for more information refer to SPD 4a)
  • Enter the amount of Married Couple’s allowance in the income, allowances, benefits and deductions area under the ‘Marriages / Civil Partnerships on or after 5 December 2005

Check if any other allowances or deductions need changing as a result of the marriage or civil partnership, for example, a bereavement benefit may no longer be due on remarriage or civil partnership.

Married Couple’s allowance will not automatically be reduced in the year of marriage when estimated income is entered on the record. You will need to manually calculate any income reduced age-related allowances, and to recalculate the allowance if the estimated income is amended.

Death of either spouse or civil partner

The death of a person’s spouse or civil partner will be a very trying time for them. You can help by being sympathetic and dealing with their tax affairs as quickly and efficiently as you can.

From April 2001, bereavement benefits have been payable to men and women. Details of these benefits are in the Employment Income (EIM) Manual at EIM76170 onwards.

Amend the marriage details on the system; refer to SPD 4a and SPD 4c for more details on dealing with deceased cases.

Form 18 elections

Where a valid election is received take the following action

  • Record receipt of the form on the income, allowances, benefits and deductions area (SPD 6a)
  • Acknowledge the election on Form 18 (Acknowledgement). Address this to the spouse or civil partner who has elected for half of the allowance or to the couple if it is a joint election
  • Using the information on Form 18 make a Contact History note on the record of the spouse or civil partner who had the full allowance of the election
  • Where this is a file case, file the election in the permanent notes folder
  • Where this is not a file case, make a note on Contact History on the individual’s record to include

    • Date of receipt of Form 18
    • Whether the election is for half or the full amount of the allowance
    • First year the election applies
    • Date Form 18 (Acknowledgement) and date notification recorded on spouse or civil partners records
  • Transferred allowances are entered using the abbreviation Married Couple’s allowance in the income, allowances, benefits and deductions area under the ‘Marriages / Civil Partnerships on or after 5 December 2005

Remember that

  • Except in the year of marriage, the only permitted entries are one half or the whole of the minimum of the Married Couple’s allowance for the year
  • For the year of marriage, you may only enter one half or the whole of the reduced Married Couple’s allowance due if the date of marriage or civil partnership is held on record, and the dates of birth of both spouse or civil partners are present. At the same time you should enter the correct amount for CY+1
  • The amounts in the CY coding will be carried forward to CY+1 unless you enter a different amount

Even if a Form 18 election is in force, either spouse or civil partner can still transfer to the other spouse or civil partner any surplus Married Couple’s allowance. Usually the notice will be given after the end of the year, when details of income are known.

Surplus Married Couple’s allowance that is transferred to a partner is included in coding by entering the amount of Married Couple’s allowance in the income, allowances, benefits and deductions area under the ‘Marriages / Civil Partnerships on or after 5 December 2005. Blind Person’s allowance is entered in the income, allowances, benefits and deductions area.

Whenever a transfer of allowances is made there are certain indicators that need to be set to make sure the case is reviewed. Further information is given below. A Form 18 election cannot be withdrawn in-year even if the couple have separated.

Jointly held assets

Married couples and civil partners often have investments and bank accounts held in their joint names. Often it is hard to decide how to split the income between them. The general rule is that jointly held assets are split equally between couples / civil partners.

In certain circumstances they can ask to be taxed on their actual entitlement to income from the joint asset. To do this they need to make a ‘declaration’. They can do this on form 17 and you should issue this form if appropriate.

Make sure that you advise the other spouse’s or civil partner’s office of any decisions that you make.

Married Couple’s allowance

From 5 December 2005 the highest earner of the married couple or civil partnership can claim the Married Couple’s allowance for a year of assessment, if in that year

  • They are married or have formed a civil partnership by registration

And

  • The date of marriage or civil partnership is on or after 5 December 2005

And

  • Their spouse or civil partner lives with them

And

  • At least one of the couple / civil partner was born before 6 April 1935

Note: Entitlement to Married Couples allowance continues even if a spouse goes in to residential care.

Provisional transfer of surplus allowances

The primary source record of the highest earner may sometimes transfer a surplus of allowances to the other spouse or civil partner.

In these cases

  • The primary source record must confirm the figure each year
  • The record of the spouse or civil partner must only continue a provisional transfer of surplus allowances if they have permission from the primary source record

The Married Couple’s allowance in the highest earner’s coding will be reduced to the amount required and the balance of the Married Couple’s allowance will be transferred to the spouse or civil partner’s code.

Separation

The breakdown of a marriage or civil partnership is likely to be a difficult time for either spouses or civil partners. Try to sort out the taxation problems connected with it as quickly and sympathetically as you can.

When a married couple or civil partners first separate you will need to find out the facts such as, when they separated and new addresses. In some cases you may also need to establish who has responsibility for any children or maintenance arrangements. If you do not have the information you should send a letter if necessary.

Transferring allowances between spouses or civil partners

In certain circumstances you can transfer allowances between the spouses or civil partners.

An election can be made for the spouse / civil partner to receive one half, or the whole, of the basic Married Couple’s allowance. This is regardless of the level of the spouse’s / civil partner’s income. However, the age-related additions cannot be transferred.

An election is made on Form 18 and remains in force until amended or withdrawn.

Any surplus of the Married Couple’s allowance which is unused, because their income is too low, can be transferred to the spouse / civil partner if the other spouse / civil partner gives notice that they want to do this. Form 575 is the designated form for giving notice. However it is not compulsory and a letter can be accepted. See SPD6a.11.