Business

Give yourself a (tax) break and help pay for that festive splurge

Darren McKeever
Darren McKeever Darren McKeever

WITH this being Blue Monday (which I wrote about last week), and those Christmas credit card bills coming through, who would turn down the opportunity to get back a wad of cash from the taxman? Nobody, I hear you all reply.

Well, you may be surprised to know that people in Northern Ireland may actually be turning down the chance to bank around £400 - and you may be one of them.

For as my fellow personal finance columnist Malachy McLernon also eludes to in his piece on this page, almost three million couples across the UK are missing out on a simple tax break - and HMRC now wants to find them and give them the money.

So how do you find out if you qualify? Put simply, it’s the Revenue’s transferable marriage allowance, introduced by the then Chancellor George Osborne in 2013 before coming into action in April 2015.

Mr Osborne introduced the tax break after a campaign to promote the benefits of marriage. So, how does it work?

The transferable marriage allowance allows couples who are married or in a civil partnership, to transfer part of their annual allowance to each other. If one person pays no tax because their income is less than the personal allowance (£11,000) HMRC lets them transfer £1,100 of their allowance to their tax-paying partner.

The idea is to support people who have taken early retirement, people who had a career break, those who have taken extended parenting leave or those who work part-time.

How do we qualify? Well, do you or your partner earn less than the current personal allowance level of £11,000 per annum?

If you answer is ‘yes’, does the other person in the relationship (marriage or civil partnership) earn between £11,000 and £43,000 per annum.

If you can answer ‘yes’ to both questions you should look at how you can become part of the scheme.

Why should you do this? Well, HRMC are actively running a campaign to get people to sign up to the scheme, so take the opportunity while you can.

The tax break from transferring £1,100 of your allowance across to your partner is worth up to £220 per year. Not a huge amount, but it can go some way towards covering the £809.97 spent by the average family on Christmas.

As part of the current revenue campaign, eligible couples not signed up would be allowed to backdate their claim and potentially receive a payment of up to £432.

That could cover half the cost of the average Christmas, which is a pretty good result.

At the moment the revenue has calculated that 4.2 million couples are eligible to take advantage of this scheme. But only 1.3 million couples have actually transferred their allowance.

If you’re one of the 2.9 million couples across the UK who haven’t signed up for the scheme, then taking action right now can save you money that you can use towards using your ISA allowance before April 5, overpaying on your mortgage, adding it to your pension scheme, getting jobs done around the house - or just paying for a treat to beat that Blue Monday feeling.

:: Darren McKeever (dmckeever@wwfp.net) is Northern Ireland adviser of Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. For a free, no obligation initial chat about your individual finances, call 028 6863 2692, email info@wwfp.net or click on www.wwfp.net. Follow us on Twitter: @WorldwideFP.