Q. I am a Scottish taxpayer and I understand my income will be taxed differently from the rest of the UK this year. Can I still claim the marriage allowance?
A. The marriage allowance allows a transfer of up to 10% of the personal allowance from one spouse or civil partner to the other. The personal allowance for the 2018/19 tax year is £11,850, meaning that up to £1,185 can be transferred. Tax relief is given at 20%, which can result in an overall tax saving of £237 for one of the spouses or civil partners. This amount is the deducted from the tax liability to reduce the amount of tax due. The marriage allowance claim is most effective when one spouse/civil partner is a non-taxpayer and the other is a basic rate taxpayer. This allowance is not available if either of the spouses pay higher rate tax.
Despite Scottish tax payers now paying tax at the “starter” and “intermediate” rates of 19% and 21% respectively, HM Revenue & Customs announced in May 2018 that they would still allow the relief from the marriage allowance to be received at 20% for Scottish taxpayers despite the different rates of tax.
Due to these new rates, the basic rate band for Scottish taxpayers is now set at £43,430, whereas the basic rate band for UK taxpayers is £46,350. Therefore, if you are a Scottish taxpayer and your income is above £43,430, you will not able to make a claim for the marriage allowance. However, if you are a UK taxpayer, your income could be up to £46,350 before you are unable to make a claim.
However, in some cases a Scottish taxpayer’s income may be able to exceed the basic rate band of £43,430 if some of their income is made up of either dividend income or savings income. This is due to the fact that these types of are still taxes at the UK rates. Therefore, a claim for the marriage allowance from one spouse to the other may still be possible, in these circumstances.
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