The personal finance expert has explained how a simple HMRC rule could help eligible couples across the UK – with 2.1 million failing to claim
A viewer of The Martin Lewis Money Show Live has revealed how he and his wife received a substantial payout from HMRC – all thanks to a special allowance. Mr Lewis has previously outlined how couples can access financial assistance and benefit from a considerable tax break that can be backdated.
The personal finance guru explained on his ITV programme how married couples can take advantage of the scheme if one partner is not in employment. Mr Lewis stated it effectively delivers a £1,260 tax saving for married couples – noting that it applies ‘provided one of you is aged under 90’.
In a recent post on X, the show highlighted one couple who had benefited from the scheme and received a welcome lump sum. They said: “We were watching the show and we heard Martin talking about transferring the spouse’s tax allowance.
“I had retired on medical grounds so I was not paying tax and he said that it is possible to transfer a non- taxpaying spouse’s tax allowance to their partner. Following the show, I went on to the gov.uk website and was surprised how easy it was to complete the forms. We are benefiting from about £250 a year in tax allowance. I was able to claim, I think it was about 4 years of back tax, which was about £1,000. And we used that £1,000 to have a rather nice holiday in Cornwall, particularly as it coincided with Hillary recovering from her chemo. If you can save a few pounds here and a few pounds there, it’s money in the pocket.”
Approximately 2.1 million people are missing out on claiming the funds – and those who have not previously applied could be entitled to £1,260 as a lump sum – backdated for four years plus the current year. One partner must be a non-taxpayer, enabling them to transfer the portion of their personal allowance they are not utilising.
He stated: “Imagine we have a couple here. The crucial part of this. One of you needs to be a non-taxpayer, so you are not earning your full personal allowance you can earn before you start paying tax on it.”
If someone is not paying income tax, he explained that would make them eligible as a non-taxpayer for this relief. The other partner must be paying no more than the 20 per cent tax rate.
He stated: “Clearly you have to be married or civil partners. Then what happens is this, each of you have your £12,570 personal allowance. That’s the amount you can earn that you don’t pay tax on each year.
“So the non-taxpayer can apply to Gov.uk to move 10% of their tax-free allowance across to the basic rate taxpayer.”
He explained that this arrangement would leave the non-taxpayer with an allowance of £11,310 while their partner would benefit from a combined allowance of £13,830.
“Now that 10% extra tax-free allowance they have, remember they would have paid tax on it at 20%, so the gain there is £252 a year, and that’s what moving across works, and in virtually every circumstance, even if the person here earned a little bit above that threshold where they might pay a little bit of tax, but as long as the person on this side is earning over £13,830, you’re always going to be net up if there’s a non-taxpayer and a taxpayer.
“The way it works for the current year your tax code is changed, for past years they send you a check or they send you a bank transfer. So the marriage tax allowance is absolutely crucial to do.”
You can apply for marriage tax allowance here.
