What tax allowances am I entitled to?
Some tax allowances work by reducing your taxable income. Others work by reducing the amount of income tax you pay (these are sometimes called ‘tax reducers’). Below we explain tax allowances which are relevant to pensioners.
Am I eligible for tax allowances?
You can find more information about tax allowances, including who is eligible for them, in our tax basics section.
Are there special tax allowances for older people?
There are now only two tax allowances that apply specifically to older people. These are:
- Relief for maintenance payments – this relief is described in our tax basics
- Married couple’s allowance – this is described below.
Prior to 6 April 2016, there used to be an age-related personal allowance for older people. Nowadays, the personal allowance is the same for everyone. See our tax basics section.
The other allowances that are the same for people of all ages are:
- blind person's allowance (BPA) – find more information, including the eligibility criteria, in the tax basics
- the so-called marriage allowance (also known as the ‘transferable tax allowance’ – see more in our tax basics section), but note that if one of you was born before 6 April 1935, you should claim the married couple’s allowance instead as it will be more beneficial.
There are also tax-free amounts that you might be able to claim that are referred to as allowances, but which do not work in quite the same way as the basic personal allowance. These are:
- trading and property allowances – see our tax basics section for further information
- the personal savings allowance and dividend allowance, which are in fact ‘nil’ rates of tax. The income is therefore still taxable but no tax is actually payable on it. This can be an important distinction in some areas of tax law, such as in calculating the tax rate payable on deferred state pension lump sums. There is more information on the page about tax rates in the tax basics section and the savings and tax.
What is the married couple's allowance?
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.
MCA is different from the marriage allowance (also known as the ‘transferable tax allowance for married couples and civil partners’).
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 2022/23 the full allowance is £9,415. This means you get a maximum deduction of £941.50 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 £31,400 in 2022/23, 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.
Frank and Sue: separation – MCA
Frank and Sue, both born before 6 April 1935, separated during the current tax year 2022/23. Frank's income for the year was £16,500. He receives the full MCA of £9,415 giving him £941.50 off his tax bill.
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.
Roger: MCA in year of death
Roger, born in 1933, died during 2022/23. His income before allowances was £13,160 and the tax he was due to pay for the year amounted to £118. His MCA was worth £941.50 so the balance of £823.50 is available for his widow to use against her tax bill.
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.
Jock and Marie: marriage in tax year – MCA, 2022/23 tax year example
Jock and Marie, both born in 1934, got married on 24 May 2022. Marie has only state pension and Jock has income before allowances of £16,500. His MCA for 2022/23 was £9,415 x 10/12 or £7,845.84. Jock could therefore deduct £784.58 from his tax liability for 2022/23.
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 £1,820 of it herself – £182 off her tax bill; or
- have £3,640 if both husband and wife agree – worth £364 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.
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 £1,820 of the MCA – £182 off their tax bill; or
- have £3,640 if both partners agree – worth £364 off their tax bill.
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.
How does higher income reduce my married couple’s allowance?
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 – £31,400 for 2022/23. 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 – £31,400 for 2022/23. The income of the lower earning spouse or civil partner is never taken into account.
The minimum MCA that you can receive is £3,640 for 2022/23 – £364 off your tax bill – and you are entitled to this amount no matter how much income you have.
The income limit is £31,400 for 2022/23.
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).
Example: Josh – income over threshold for restriction of MCA
Josh has income before allowances of £33,700 for 2022/23. He was born in 1931 and his wife was born in 1934. Josh’s income has exceeded the limit of £31,400 meaning his MCA will be reduced.
Income before allowances
Divided by 2
Josh can deduct £8,265 @ 10% or £826.50 from his 2022/23 tax bill.
To work out whether or not your taxable income before allowances is more than £31,400, 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 which the charity reclaims. To work out what this 20% tax figure is easily, 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 £42,950 or more in the 2022/23 tax year, you will only receive the minimum MCA of £3,640 (that is, a tax deduction of £364) for 2022/23.
Can I transfer my allowances to my spouse or civil partner?
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.
Note that this works in an odd way: the spouse or civil partner giving up part of their personal allowance has it taken off their personal allowance. However, the receiving spouse or civil partner does not have the allowance added to their personal allowance – instead, they get an amount taken off their tax bill.
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 this online form. Using this form, you can transfer the minimum MCA – £3,640 for 2022/23 – 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(T) to request a transfer of the surplus MCA.
Example: Jim – surplus tax allowances
Jim was born in 1933. His income before allowances for 2022/23 was £14,500 and the tax he was due to pay for the year (before deduction of the MCA) amounted to £386. His MCA was £9,415 @ 10% or £941.50 so the balance of £941.50 - £386 = £555.50 is available for his wife to use against her tax liability. He must apply to transfer the surplus using form 575(T).
Transferring surplus allowances if you claim both BPA and MCA
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.
Example: Patrick – transfer of BPA
Patrick was born before 6 April 1935 and is married to Jan, who is two years younger. His taxable income before allowances for 2022/23 is £8,500 and is less than his personal allowance. Patrick claims BPA and therefore this £2,600 can be transferred to Jan, reducing the income she has that is charged to tax. Jan will also receive the MCA.
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 is the money purchase annual allowance?
The money purchase annual allowance is not a tax allowance that is taken off your income or used to reduce your tax bill in the way that we have mentioned for other types of tax ‘allowance’.
Instead, it is a limit on how much you can pay into pensions in future if you take taxable amounts out of money purchase pension savings. Our guide on pensions flexibility explains more about this.