Martin Lewis said couples could get a chunk of money by applying for marriage tax allowances (Image: ITV)
Money-saving guru Martin Lewis has delivered a crucial piece of advice for couples, emphasising the urgency to take action to secure a significant tax advantage. Amidst increasing pressure for the personal tax allowance to be raised from £12,570 to £20,000, this timely guidance becomes of greater importance.
Since 2021, the income tax threshold has been fixed, meaning those earning above a certain level pay a 20 percent income tax rate, resulting in more low-income earners being taxed due to ‘fiscal drag’.
An online petition demanding the increase to £20,000 has garnered over 170,000 supporters, and the Treasury has acknowledged these requests. To see the petition, .
Lewis points out that married couples can slightly outpace the personal tax allowance if one partner does not work. He outlined that there is a monetary gain available to couples, with a possible tax reduction of £1,260 for qualified pairs, and this offer extends to individuals “provided one of you is aged under 90” – particularly for those born after April 5, 1935.
The financial whizz also illuminated that approximately 2.1 million people are failing to claim what’s rightfully theirs. Moreover, he noted that new applicants could potentially reclaim up to £1,260 by backdating their claims for four years, in addition to the current year.
Money-saving expert Mr Lewis has highlighted a valuable tip for couples looking to maximise their tax benefits. He clarified the criteria for the scheme: “Imagine we have a couple here. The crucial part of this. One of you needs to be a non-taxpayer, so you are not earning your full personal allowance you can earn before you start paying tax on it.”
To qualify, one partner must not be using their full personal allowance as they are not subject to income tax, while the other should be a basic rate taxpayer at 20 percent.
Mr Lewis emphasised: “Clearly you have to be married or civil partners. Then what happens is this, each of you have your £12,570 personal allowance. That’s the amount you can earn that you don’t pay tax on each year.”
He then detailed the process: “So the non-taxpayer can apply to Gov.uk to move 10% of their tax-free allowance across to the basic rate taxpayer.”
By doing so, the non-taxpayer’s new allowance would be £11,310 and the taxpayer’s would increase to £13,830.
Money Saving Expert Martin Lewis has issued a crucial alert to couples regarding the marriage tax allowance, explaining the potential benefits in detail. He said: “Now that 10% extra tax-free allowance they have, remember they would have paid tax on it at 20%, so the gain there is £252 a year, and that’s what moving across works, and in virtually every circumstance, even if the person here earned a little bit above that threshold where they might pay a little bit of tax, but as long as the person on this side is earning over £13,830, you’re always going to be net up if there’s a non-taxpayer and a taxpayer.”
Emphasising the importance of timing, Mr Lewis warned that action must be taken before the end of the tax year on April 5.
He noted: “The tax year ends on the 5th of April, you can claim back up to 4 tax years as long as you are eligible, which means a total gain of £1,258.”
Meanwhile, a petition by Alan Frost calls for an increase in the personal tax allowance, stating: “Raise the income tax personal allowance from £12,570 to £20,000. We think this would help low earners to get off benefits and allow pensioners a decent income.”
The petition also highlights the unfairness of taxing pensioners on their above the personal allowance and suggests that raising the allowance could lift many low earners out of benefits and stimulate economic growth. It reads: “We think it is abhorrent to tax pensioners on their when it is over the personal allowance. We also think raising the personal allowance would lift many low earners out of benefits and inject more cash into the economy creating growth.”
The Treasury has firmly dismissed the idea of increasing the Personal Allowance to £20,000: “The Government has no plans to increase the Personal Allowance to £20,000. Increasing the Personal Allowance to £20,000 would come at a significant fiscal cost of many billions of pounds per annum. This would reduce tax receipts substantially, decreasing funds available for the UK’s hospitals, schools, and other essential public services that we all rely on. It would also undermine the work the Chancellor has done to restore fiscal responsibility and economic stability, which are critical to getting our economy growing and keeping taxes, inflation, and mortgages as low as possible.”
Despite this resistance from the Government, the proposal has crossed the 100,000 signature threshold, making it eligible for discussion in the House of Commons; however, a debate date is yet to be scheduled. At present, taxpayers start paying a basic rate of 20% at £12,570 and enter the 40% tax bracket at £50,270 – thresholds frozen since 2021.
By the end of the current freeze in 2028, experts anticipate the ‘fiscal drag’ effect will have generated an additional £1.2 billion for the Treasury. This phenomenon drags more people into paying tax or higher rates due to stagnant thresholds.
Experts warn that retaining such thresholds imposes excessive burden particularly on lower earners. Those eligible can apply for marriage tax allowance here.