TAX REBATES may be available for some married couples under the Marriage Allowance, however, an upcoming deadline means that some people may need to act sooner rather than later.
Christmas can be an expensive time of year, and with the string of bank holidays providing some with time off work, it could prove to be an opportunity together one’s finances in order. There are a whole host of ways in which a person may be able to make their money go further, and with Christmas fast approaching, NFU Mutual’s chartered financial planner Sean McCann has shared some insight into financial options which loved ones could be very grateful to get.
For married couples, there could be some urgency to act in the near future too.
The Marriage Allowance lets a person transfer £1,250 of their Personal Allowance to their husband, wife, or civil partner – if they are a higher earner.
This could reduce the higher earner’s Income Tax by up to £250 in the tax year.
This current tax year runs from April 6, 2019 to April 5, 2020.
In order to benefit as a couple, the lower earner must normally have an income below their Personal Allowance – which is usually £12,500.
It is possible to backdate the claim to include any tax year since April 5, 2015 that the couple was eligible for Marriage Allowance.
Mr McCann explained: “The Marriage Allowance entitles non-taxpayers to transfer up to 10 percent of their £12,500 personal allowance to a basic rate taxpaying spouse or civil partner.
“Transferring £1,250 of your tax-free allowance to your taxpaying partner this year reduces their Income Tax bill by £250.”
However, according to the financial planner, eligible couple’s may need to act sooner rather than later if they want to backdate their claim for the past four years.
That’s because he said that in the upcoming tax year, there will no longer be the option to reclaim the allowance from 2015/16.
“Couples who haven’t claimed it for the past four years can get the rebate backdated and get a cheque from the taxman for up to £900, making the total gift worth up to £1,150,” he said.
“The clock is ticking, this is the last Christmas people will be able to reclaim the allowance from 2015/16, because come next April it will be lost.”
Mr McCann also explained how parents could help their offspring get on the property ladder, should they have reached the age of 18.
This suggestion is by giving them money to pay into a Lifetime ISA, which offers a 25 percent government bonus on contributions.
Savers can pay in unto £4,000 in each tax year into this type of account, and the maximum government bonus in this time frame is £1,000.
“If the adult children in your family are saving to buy their first home, giving them money they can save into a Lifetime ISA will also mean they get an extra gift from the taxman,” the financial planner said.
“If your child is aged between 18 and 40 they can invest up to £4,000 each tax year and get a £1,000 bonus from HMRC.”
Mr McCann also pointed out that charges may apply should the money be withdrawn except
“The only downside is if they withdraw the money for any reason other than buying their first home, they have to repay the bonus.”
The Marriage Allowance entitles non-taxpayers to transfer up to 10 percent of their £12,500 personal allowance to a basic rate taxpaying spouse or civil partner