What tax allowances am I entitled to?
Most tax allowances work by reducing your taxable income to reduce the amount of income tax you pay. This means that you can have a certain amount of taxable income each year, tax free. You only pay income tax on taxable income that is above your tax allowance.
You can find more information about tax allowances, including who is eligible for them, in the ‘tax basics’ section of this website.
The personal allowance is a tax allowance that is available to most people who are resident in the UK. It reduces the amount of taxable income on which you pay tax.
There is information on the personal allowance, including an example, in our ‘tax basics’ section.
Blind person's allowance (BPA) reduces the amount of taxable income that you have to pay tax on. If you are eligible for BPA, you are entitled to it in addition to the personal allowance.
There is more information on BPA including the eligibility criteria in the ‘tax basics’ section.
The married couple’s allowance (MCA) does not reduce the amount of taxable income on which you pay tax. It is used to calculate an amount to reduce your tax bill instead.
You are only entitled to MCA if you are married or in a civil partnership and at least one of you was born before 6 April 1935.
MCA works by deducting 10% of the allowance from the tax due on your taxable income.
For 2017/18 the full allowance is £8,445. This means you get a maximum deduction of £844.50 from your income tax, but note that this amount can never be refunded to you even if you have no tax liability.
The amount of MCA you get can be affected by the level of your income. If your income is more than £28,000 in 2017/18, you might not be entitled to the full MCA.
There is only one MCA per married couple or civil partnership.
What is the living together requirement?
MCA is due for each tax year that you are living together as husband and wife or civil partners. You also get the full allowance, subject to income levels, in the year of separation, divorce or the death of either spouse/civil partner. If you are separated for reasons beyond your control – such as one of you having to go into residential care – HMRC should still treat you as living together for purposes of MCA.
Look at the example Frank and Sue.
Do I get MCA in the year of death?
In the year your spouse or civil partner dies you should also get the balance of MCA not used against their income without needing to make a claim, but HMRC have been known to miss this point so do check you get it.
Look at the example Roger.
Do I get MCA in the year of marriage?
In the year of marriage or registration of a civil partnership, the amount you are entitled to is one twelfth of the allowance for each complete tax month – starting on the 6th of the month – that you were married.
Let HMRC know as soon as possible if you marry or register a civil partnership in a tax year and qualify because one of you was born before 6 April 1935. You will get your tax relief quicker.
Look at the example Jock and Marie.
Which one of us claims the MCA?
If you are part of a married couple, who qualified for the allowance before 5 December 2005, the MCA is automatically given to the husband. However, a married woman can:
- choose to have up to £1,630 of it herself – £163 off her tax; or
- have £3,260 if both husband and wife agree – worth £326 off her tax bill.
The balance is used to reduce the husband's tax bill. But if there is any further surplus MCA remaining unused by the husband by the end of the tax year, the couple can claim to transfer it to the wife.
If you are part of a married couple or civil partnership, who first qualify for MCA from 5 December 2005 onwards, MCA is given to the partner with the higher income. The other partner can:
- choose to have up to £1,630 of the MCA – £163 off their tax; or
- have £3,260 if both partners agree – worth £326 off their tax.
The rest has to be taken off the tax bill of the partner entitled to the allowance. If there is any surplus MCA remaining unused by the higher earning civil partner or spouse by the end of the tax year, the couple can claim to transfer it to the other civil partner or spouse.
It is also possible for a couple who married before 5 December 2005 to elect for the new rules to apply to them. HMRC will be able to help you make the change if you contact them.
The MCA can be reduced for a couple when:
- for those married before 5 December 2005, the husband's income is above an amount set for each year – £28,000 for 2017/18. The income of the wife is never taken into account; or
- for those married or registered after 5 December 2005, the higher earning spouse or civil partner's income is above an amount set for each year – £28,000 for 2017/18. The income of the lower earning spouse or civil partner is never taken into account.
The minimum MCA that you can receive is £3,260 for 2017/18 – £326 off your tax bill – and you are entitled to this amount no matter how much income you have.
The income limit is £28,000 for 2017/18.
To work out what MCA you are entitled to, you must carry out the following calculation:
- Work out your income before allowances (see note below);
- Work out the amount by which your income exceeds the limit for reducing your MCA;
- Divide the difference by two;
- Take that figure off the total MCA to leave the MCA available (but only as far as the minimum amount).
For example Josh shows this calculation.
Note that to work out whether or not your taxable income before allowances is more than £28,000, you need to add up your gross taxable income, that is, you need to include the taxable income you receive and the tax taken off before you get it.
You can then take off the gross amount of any gift aid payments you make. The amount you donate under gift aid is treated as being net of basic rate income tax at 20%. The gross amount you deduct from your income is: the net amount you actually paid to the charity plus the 20% tax taken off. An easy way to work out what this 20% tax figure is, is to divide the net payment you made by four.
Income before allowances
Note that if the husband or the higher earning spouse or civil partner has income of £38,370 in the 2017/18 tax year, you will only receive the minimum MCA for 2017/18.
What is the relief for maintenance payments?
You can find information on the relief for maintenance payments in our ‘tax basics section’.
We are often asked if married couples or civil partners can transfer their tax allowances to their spouse or partner if they do not use them. Some allowances are transferable, but others are not.
Marriage allowance or transferable tax allowance
You can only transfer some of your personal allowance to your spouse or civil partner if you meet certain conditions. This is known as the transferable tax allowance for married couples and civil partners or “marriage allowance”. Note that this is not an extra allowance – it is part of the personal allowance.
You can see more information about the marriage allowance and how it works in our ‘tax basics' section.
Blind person's allowance (BPA)
You can transfer the BPA to your spouse or civil partner if your income is too low to make use of it. You can find more information on transferring BPA in the 'tax basics' section.
Married couple's allowance (MCA)
You can transfer the MCA to your spouse or civil partner if your income is too low to make use of it.
If you decide to share the MCA or transfer the minimum MCA before the start of the next tax year, you can complete and submit form 18. Using this form, you can transfer the minimum MCA – £3,260 for 2017/18 – to your spouse or civil partner with effect from the start of the next tax year. The claim continues to apply until you withdraw it.
If you find after the end of the tax year that your income was not high enough to use your full MCA, you can ask for the balance, or ‘surplus’, to be transferred to your spouse or civil partner. You use form 575 to request a transfer of the surplus MCA.
Look at the example Jim to see how this works.
If you are claiming both BPA and MCA you cannot transfer the surplus of one allowance and not the other. You must transfer both allowances together.
Look at the example Patrick to see how this works.
How does marriage or civil partnership separation affect my tax allowances?
For information on how marriage or civil partnership separation affects your tax allowances, look at our ‘tax basics section’.
What are the personal savings and dividend tax allowances?
These ‘allowances’ are not really allowances at all; they are amounts of savings and dividend income that you can have and on which tax will be due but at a rate of 0%. The income is therefore still ‘taxable’ but no tax is actually payable on it.
Frank and Sue, both born before 6 April 1935, separated during the current tax year 2017/18. Frank's income for the year was £16,500. He receives the full MCA of £8,445 giving him £844.50 off his tax bill.
Roger, born in 1933, died during 2017/18. His income before allowances was £12,160 and the tax he was due to pay for the year amounted to £132. His MCA was worth £844.50 so the balance of £712.50 is available for his widow to use against her tax bill.
Jock and Marie, both born in 1934, get married on 24 May 2017. Marie has only state pension and Jock has income before allowances of £15,500. His MCA for 2017/18 is £8,445 x 10/12 or £7,038. Jock can therefore deduct £703.80 from his tax liability for 2017/18.
Jim was born in 1933. His income before allowances for 2017/18 was £13,500 and the tax he was due to pay for the year amounted to £400. His MCA was £8,445 @ 10% or £844.50 so the balance of £844.50 - £400 = £444.50 is available for his wife to use against her tax liability. He must apply to transfer the surplus using form 575.
Patrick was born before 6 April 1935 and is married to Jan who is two years younger. His taxable income before allowances for 2017/18 is £6,500 and is less than his personal allowance. Patrick claims BPA and therefore £2,320 can be transferred to Jan, reducing the income she has that is charged to tax. Jan will also receive Patrick's MCA.
Josh has income before allowances of £31,400 for 2017/18. He was born in 1931 and his wife was born in 1934. Josh’s income has exceeded the limit of £28,000 meaning his MCA will be reduced.
|Income before allowances||31,400|
|Divided by 2||1,700|
Josh can deduct £6,745 @ 10% or £674.50 from his 2017/18 tax bill.
Where can I find more information?
For more information on tax allowances, you may find the following section of this website helpful:
- there is more information, including examples, on the personal allowance, in the 'tax basics' section of this website;
- there is more information, including examples, on the blind person's allowance, in the 'tax basics' section of this website.