Some couples will save as much as £200 a year with the introduction of the new marriage tax allowance for married couples and civil partners. It's thought that as many as four million families will benefit from this tax break, which could cost the government nearly £0.7 billion per year. Couples that are living together but are not married or in a civil partnership will not be eligible.
Beginning in April 2015, those eligible will be able to 'transfer' £1,000 of their personal tax allowance to their partner. The personal allowance is the amount a person can earn before they start paying income tax. To qualify one partner must earn less than the personal allowance, and the other must earn below the basic rate threshold.
The plans were revealed by George Osborne in today's 2013 Autumn Statement, which outlined financial plans for the year ahead. He also announced that individual personal allowances will rise from the current rate of £9440, o £10,000 in April 2014. If you earn more than the personal allowance you currently pay 20% income tax, up to £41,450, 40% on any income between £41,450 and £150,000, and any income above £150,000 is taxed at 40%.
In his speech chancellor George Osborne said “This Autumn Statement confirms that from April 2015 we will introduce a new transferable tax allowance for married couples. Available to all basic rate taxpayers, it enables people to transfer £1,000 of their personal allowance to their wife, husband, or civil partner. It is just a start.”
He went on to say, “And I confirm today that we will introduce a new uprating mechanism that ensures that the new married couples tax allowance is automatically increased in proportion to the personal allowance. Four million families will benefit, many of them among the poorest working families in our country.”
In advance of the statement Cameron commented ,"I believe in marriage, I believe marriage should be recognised in the tax system. I see this as, yes, a start of something I would like to extend further."