HMRC update for millions of Britons missing out on tax refunds worth up to £1,008

Married couples and civil partners across the UK could be missing out on tax refunds worth up to £1,008 by failing to claim Marriage Allowance.

The tax relief allows eligible couples to reduce their household tax bill by up to £252 a year, with claims currently able to be backdated to April 6, 2022.

Experts have warned the allowance is often overlooked because many people become eligible following gradual changes to their income rather than a single significant event.

A spokesperson for financial assistance platform Vettory said: "This is exactly the sort of allowance that can be missed because nothing dramatic happens when you become eligible."

With four years of potential tax savings available, eligible couples are being encouraged to check whether they qualify.

Marriage Allowance enables a husband, wife or civil partner earning less than the Personal Allowance threshold of £12,570 to transfer £1,260 of their unused tax-free allowance to their partner.

To qualify, the receiving partner must be a basic rate taxpayer, typically earning between £12,571 and £50,270.

In Scotland, different income tax bands apply, meaning the receiving partner must pay tax at the starter, basic or intermediate rate, which generally covers earnings between £12,571 and £43,662.

Couples where one partner was born before April 6, 1935, may instead benefit more from Married Couple's Allowance, although it is not possible to claim both schemes at the same time.

Applications for Marriage Allowance can be submitted through the Government website or by post.

The Vettory spokesperson said: "A partner may reduce their hours, retire, take time out for caring, or have a lower-income year, and the couple never think to revisit their tax position."

They added: "Use the official GOV.UK Marriage Allowance service first, make sure you meet the rules for every year you are claiming, and set a yearly reminder to review any tax breaks or benefit entitlements that may have changed with your income."

Once a successful claim has been made, HM Revenue and Customs typically adjusts the couple's tax codes so the allowance continues automatically in future tax years.

While Marriage Allowance is available to eligible married couples and civil partners, it cannot be claimed by unmarried couples living together.

More than 3.5 million cohabiting couples across the UK are therefore unable to benefit from the tax break under the current rules.

Sean McCann, chartered financial planner at NFU Mutual, said: "The Marriage Allowance allows non-taxpayers to transfer up to £1,260 of their unused Personal Allowance to their basic rate tax-paying spouse or civil partner.

"It's worth up to £252 this tax year and claims can be backdated but is not available to cohabiting couples."

The comments come as the Government considers proposals to strengthen the legal rights of unmarried couples who live together.

For now, financial experts are encouraging eligible married couples and civil partners to check whether they qualify for Marriage Allowance and ensure they are not missing out on tax relief that could be worth up to £1,008 through backdated claims.