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Tax credits and marriage allowance thingy

(8 Posts)
MrsDeathOfRats Thu 21-Apr-16 10:08:05

Heard about this marriage allowance whereby I can transfer some of my tax free allowance to dh. So we get a couple hundred quid extra tax free.

My question is does it affect tax credits?

I feel that it should but also, it won't effect how much he earns, just how much he has paid tax on?

Does anyone know how it works?

chunkymum1 Thu 21-Apr-16 10:28:18

In the UK, every individual has a tax free allowance- this is the amount of money that they can earn without having to pay any tax. For a UK based employee, income after than amount is taxed. If you have no income, you still have a tax free allowance, yuo just don't use it.

There is a quite recent tax rule which allows a spouse earning less than his/her tax free allowance to transfer up to 1,100 of his/her tax free allowance to the earning spouse (which would mean a reduction in tax of up to £220. You can only do this if the higher earning spouse earns between 11,001 and 43,000 per year. This is called the marriage allowance.

The rules are at You can also apply on line at this same web address.

If you transfer part of your allowance, then clearly you can't also use it yourself so if you did have taxable income which could have fully used your tax free allowance then you will end up paying more tax (so as a couple you will be no better off).

The marriage allowance is not an income, so should not effect the calculation of your tax credits. If you receive taxable benefits, this may have an impact on whether transfering some of your tax allowance will make you better off (ie- if you receive taxable benefits and transfer your tax allowance you may have tax to pay on them if that makes sense). However, working tax credits and child tax credits are not on the list of taxable benefits (which you can find at

I believe that if you qualify for marriage allowance this tax year you can also choose to back date it to last tax year.

Hope that helps

MrsDeathOfRats Thu 21-Apr-16 12:58:15

Yes that makes sense. I don't work so it would benefit us.

Thanks very much for clearing it up though!!

AndNowItsSeven Thu 21-Apr-16 22:41:07

It will ever so slightly as your dh will have a higher net income.

BigginsforPope Fri 22-Apr-16 08:06:46

Tax credits are based on gross income not net I think so it shouldn't affect the amount you receive.

AndNowItsSeven Fri 22-Apr-16 09:28:47

You give two figures to tax credits gross and then you deduct pension contributions, charity giving and salary sacrifice like childcare vouchers. You will be better off claiming the marriage allowance but your tax credits will reduce but not by the full £200.

chunkymum1 Fri 22-Apr-16 10:35:08

Andnow- My understanding was that (as you said) you need to provide your gross income and then certain deductions (eg pension contributions etc) on the tax credit claim. I don't believe you need to make any adjustment for tax paid. Since the marriage allowance increases your spouse's tax free allowance (and not his/her gross income/pensions contributions etc) I don't think it will have any effect on the income that you include on your tax credits claim. Although I'm not exactly an expert!

eyesontarget Thu 20-Jul-17 16:12:03

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

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