Canny romantics considering popping the question this Valentine’s Day may be interested to know that new tax rules could save some couples up to £212 a year.
A new tax relief for married couples and civil partners, which comes into effect on 6 April 2015, is designed to benefit lower earning couples where one spouse has insufficient income to use their personal allowance.
Where couples meet the conditions, the spouse with the unused allowance will be able to transfer up to £1,060 of that unused allowance to their spouse by making a claim to HM Revenue & Customs. This can be done online. However, those couples where the other spouse has income in excess of the higher rate threshold (£42,385 for 2015/16) will not be eligible.
Unfortunately, many low income couples will lose out. For example, if one spouse has no income but the other has just above the higher rate threshold, no transfer is available. Similarly, where both spouses have income just above the personal allowance there is no unused allowance to transfer. In both cases they may have joint income lower than some eligible couples.
Stuart McKinnon, Tax Partner at Baker Tilly North East said: ‘While we doubt that this new tax benefit will be a deciding factor in whether to get hitched this Valentine’s Day, it could nevertheless be a welcome bonus for some as they begin their lives together as a couple.’
Whilst many pensioner couples are likely to get some benefit from this tax break, those who are already eligible to claim the existing Married Couples Allowance (MCA) will not be eligible for the new relief. The existing MCA for married pensioner couples where one spouse was born before 6 April 1935, allows the higher-earning spouse to reduce their tax bill by 10% of the available allowance and is worth between £322 and £835.50 at 2015/16 rates.