Married couples and civil partners can register online for a new tax allowance from today, but only households on low incomes stand to benefit.
The marriage allowance permits a spouse or civil partner who doesn’t pay income tax to transfer up to £1,060 of their personal tax-free allowance to their partner.
But if that partner is a higher rate taxpayer, earning more than £42,386 a year, the couple will be excluded from the tax break.
The Government said the measure aims to introduce “recognition of marriage into our tax system” and claimed the allowance, which will be available from April 6, will save more than four million married couples and 15,000 civil partners up to £212 a year.
But it has been widely criticised for not making it available to all married couples and civil partners.
Couples can register their interest to receive the allowance at gov.uk/marriageallowance.
HMRC will contact those who have registered in April and invite them to apply.
All workers have a personal allowance for tax purposes. This is the amount of money an individual can earn in a year before they must pay tax. It is currently £10,000 and will rise to £10,600 in April.
Married couples and civil partners where one person earns less than the personal allowance will be allowed to transfer up to £1,060 of their unused allowance to their partner, reducing their tax bill. The receiving partner must be a basic rate taxpayer, earing no more than £42,385.
For example, if one person earns £5,000 and their partner earns £20,000, the lower earner can transfer £1,060 of their unused allowance to the higher earner. The higher earner can take home an additional £1,060 tax-free, so thanks to 20pc relief they will pay £212 less tax over the year.
Not all partners will receive the full £212. If one person earns £10,000, they will only be allowed to transfer £600 of their allowance to their spouse. This would result in a tax break of £120 – 20pc tax relief on £600.
The £1,060 limit will increase automatically in line with the personal allowance.
Who will lose out?
Married couples and civil partners where one person earns over the basic rate threshold are exempt, regardless of what their partner earns.
Couples where the lowest earner brings in more than the personal allowance will also miss out because only unused allowances can be transferred.
Couples who are cohabiting but are not married or in a civil partnership will also miss out, regardless of how long they have been together.