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January 2016

For richer, for poorer, in sickness and in tax relief


Overview


Married and civil partnership couples are now able to transfer a portion of their personal tax allowance to their other half, increasing some couples' earnings by up to 212 per year.


For some lucky individuals, that's the TV licence, road tax or pet insurance covered for 12 months. Far from a life-changing sum, but not a figure to be snubbed.

The changes were announced in 2014 coupled with the launch of a 25 million computer system called Verify which has been integrated to assist claimants.


Despite the time and money that has been invested in setting up the system, couples are still struggling to take advantage of this annual saving. Following registration, HMRC sent thousands of emails asking for personal information including driving license, passport and financial details.


Those who had hoped to take advantage of the scheme, quite rightly, questioned the legitimacy of these emails. They were wary about being asked these details by email, and many then decided to abandon their application.


Those who had hoped to take advantage of the scheme, quite rightly, questioned the legitimacy of these emails. They were wary about being asked these details by email, and many then decided to abandon their application.


"The system may not be off to the best start, but all is not lost," explains Derek. "HMRC is aware of the technical issues and is working to resolve them. To enter into the scheme applicants need to register in the first instance. The registration process takes about three minutes and can be completed on the Government's website.


"HMRC announced the formal application invitation so that it can streamline the service before opening it up to the wider public later in the year. Once applicants have registered, it's a waiting game and this is where people have been put off."


Once ready, HMRC will send an email inviting individuals to apply online. The marriage allowance can be applied for online through the Government's Verify service. The partner transferring the allowance - and only them - will need to confirm their identity with a valid UK passport or UK photocard driving licence and financial information such as a bank, credit card or mortgage statement.


In the UK, everyone is entitled to a personal tax free allowance of 10,600 per annum. If one of the partners doesn't reach this allowance, they are able to transfer up to 1,060 to the other allowing them to earn up to 11,660 tax free. Unfortunately it doesn't matter if the lower earner is 5,000 under their personal allowance, they can still only transfer 10%.


In order to qualify, couples must either be married or in a civil partnership. Both parties must be entitled to claim a personal allowance and have an income of no more than 42,385 in 2015/2016. It's also important to note that claimants should have been born after 6 April, 1935.


Derek says, "It won't pay for the annual summer holiday, but in today's climate, every little helps. The tax allowance change should benefit hundreds of couples once the online process has been streamlined.


"For those born before 6 April, 1935, there's an even better scheme. If one of the partners is over 80 years of age then the couple could be entitled to tax savings of up to 835 per annum, when income doesn't exceed 27,700, through the Married Couple's (& civil partner's) Allowance. But don't delay on this one: its longevity is uncertain."




Founded in 1976, Hall Morrice is one of Scotland's leading independent firms of chartered accountants and has offices in Aberdeen and Fraserburgh. Based at 6 and 7 Queens Terrace in Aberdeen, Hall Morrice can be contacted on 01224 647394 or at accounts@hall-morrice.co.uk


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