DWP £13,830 Tax-free Personal Allowance increased only for ‘backdating’ households: Check Eligibility Conditions

Paying too much tax? If you’re married or in a civil partnership in the UK, you might be missing out on some easy tax savings. With the government freezing the Personal Allowance, many people are being pulled into higher tax brackets. But there’s a way for couples to save money through something called Marriage Allowance. Let’s break it down in simple terms.

What is the Personal Allowance?

In the UK, everyone has a Personal Allowance – this is the amount of money you can earn each year before you start paying income tax. Right now, the Personal Allowance is stuck at £12,570 and is expected to stay the same until 2028.

Because salaries are slowly going up with inflation, more and more people are paying tax – even if their actual spending power hasn’t increased. This is called fiscal drag. It’s like your earnings are moving up, but the tax-free limit is not, so you end up paying more tax over time.

How Income Tax Works in the UK

Here’s how your income is taxed in the UK:

• You don’t pay any tax on the first £12,570 (this is your Personal Allowance).
• You pay 20% tax on anything you earn between £12,570 and £50,270.
• You pay 40% tax on income between £50,270 and £125,140.
• You pay 45% tax if you earn more than £125,140.

Now, with the Personal Allowance frozen, it becomes even more important to make full use of any legal ways to lower your tax bill. That’s where Marriage Allowance comes in.

What is Marriage Allowance?

Marriage Allowance is a special scheme for married couples or people in a civil partnership. It lets the lower-earning partner give £1,260 of their tax-free allowance to their partner. This reduces the tax bill by £252 per year.

If you haven’t claimed before, you can backdate your claim for up to four years, saving up to £1,258 in total.

HMRC will then change your tax code to reflect this, and you’ll either pay less tax or get a rebate.

Who Can Apply for Marriage Allowance?

To qualify:

• One partner must earn less than £12,570, so they don’t pay any income tax. This could be someone who is:
  • Not working
  • On a career break
  • A stay-at-home parent
  • Working part-time with low income
• The other partner must be a basic rate taxpayer. That means they earn between £12,570 and £50,270, after pension contributions.

How Much Can You Save?

You can save £252 every year – and if you haven’t claimed before, you can backdate it to get refunds for the last four years. That’s up to £1,258 in total.

For example:

• £252 for 2024-25
• £252 for 2023-24
• £252 for 2022-23
• £252 for 2021-22

Total: £1,008, plus the current year’s £252 = £1,260

What Changed in 2024-25?

A small change was made this year. Now, even if someone earns between £11,130 and £12,570, they can still transfer part of their allowance. The savings are smaller but still helpful.

Just remember, this only works for the current tax year and the past four years. Claims for 2020-21 and earlier are no longer accepted.

If you’re married or in a civil partnership, Marriage Allowance is a simple and legal way to cut your tax bill. If one of you earns below the tax threshold, you could save over £1,250 by claiming for the last four years. Don’t leave that money on the table – apply online through the HMRC website or talk to a tax advisor.

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