Martin Lewis' urgent warning to millions of couples missing out on 'big money'

14 March 2024 , 09:55

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The money-saving expert says Brits will have to act quick, as the tax year is ending soon

Martin Lewis says millions of couples are unkowingly eligible for a big pay-out - but you'll need to act quick.

The Money Saving Expert discussed the marriage tax allowance on his eponymously named ITV show yesterday - where he warned a staggering 2.1 million couples could be entitled to 'big money' yet aren't currently claiming it. In fact, one viewer received a cheque for £1,000 after following Lewis' advice.

Couples in the UK will need to apply for the tax scheme before the end of the tax year - which is quickly approaching (April). So, here's everything you need to know - including whether you're eligible and if you'll be better off by sending in an application.

"So there are two criterea," Lewis said. "First of all, you must be married or in a civil partnership - I'm afraid just cohabitating (living with your partner) does not count."

One person in the marriage must be a non-tax payer - this mainly applies to those earning less than the personal allowance, which currently stands at £12,570. The other person must be a 20 per cent tax payer, which tends to apply to those earning between £12,571 – £50,270

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If you are eligible for the marriage tax allowance, the non-taxpayer can apply on the government's website to transfer 10 per cent (£1,256) of their tax-free allowance to their partner. For example, if you're earning £11,500 a year and not paying tax, but your husband/wife is on a £20,000 salary - they'll be paying tax on £7,430 ( around £1,486).

But if you transfer £1,260 of your Personal Allowance to your spouse, you will have to pay tax on £190 (£38) and they will pay tax on £6,170(£1,234). This would save you a whopping £214 each year.

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"The really important thing is if you were eligible for this since 2019/2020 - you would be due a total of £1,256 if you claim back," Lewis added. "You need to do it now or you lose the £250 for that 2019/20 tax year. Once you claim it's then paid automatically year after year althought you have to declare if you're no longer eligible for it."

There are certain situations where the marriage tax allowance would not be beneifical for couples. If the non-taxpayer almost earns £12,570 and the taxpayer spouse only just earns above it - you may end up paying tax on a larger amount than they save tax on.

For example, if you're earning more than £12,000 (but less than £12,570) and your partner earns less than £13,800 - it may be worth avoiding the scheme. If you're aged 89 or over, you can apply to a different scheme altogether.

Liam Gilliver