Experts have revealed how Brits can increase their income with little-known tax rules. There are numerous tax rules and tax credits that many people may not be aware of, such as tax credits for individuals who work from home and credits for those who wear uniforms to work. However, there are also several benefits for people who are in a marriage. Consumer experts have revealed the little-known £1,260 tax rule you should take advantage of.
Money experts at Which? have advised married couples to familiarise themselves with six ways they can maximise their savings and reduce the amount of tax they pay on their income. One of them is the ‘Marriage Allowance’. This little-known tax rule allows one partner to transfer their £1,260 of personal allowance to their partner who earns more than they do. The amount is added to the allowance of the higher earner, meaning the higher-earning individual receives more tax-free income.
The rule applies to a couple where one person is a non-taxpayer. This means that they must earn less than £12,570 per year. Additionally, their partner needs to be paid more than the basic 20% tax rate.
In other words, the higher earner must earn less than £50,270. Additionally, there are different tax band rates in Scotland, where the higher-earning partner must earn less than £43,662.
By taking advantage of this tax rule, couples could earn £252 more in tax in the next tax year, 2025-26. Plus, you can backdate your claim for the past four years.
Couples who want to take advantage of this tax benefit can easily apply for it through the HMRC website. They should be able to prove that they are eligible for it, and have been for the past four years, if they wish to backdate it.
For couples where one or both partners were born before 1935, there is also the Married Couple’s Allowance (MCA), which allows one spouse to reduce their tax bill by 10%.
Which? listed several other ways married couples can maximise their money, including transferring assets between one another to make the most of their Capital Gains Tax (CGT) allowance.
