23 September 2017

FOI reply reveals over £1.3 billion in unclaimed tax breaks for married couples

4 min read

Steve Webb
Royal London



Take-up of a recently introduced tax break for married couples has been so poor that there is now over £1.3 billion in unclaimed tax allowances according to a new FOI response received by mutual insurer Royal London.

The ‘Marriage Allowance’ was introduced in 2015/16 and is designed to help married couples (and members of civil partnerships) where one partner pays standard rate income tax and the other is a non-taxpayer. The lower earner can transfer any unused tax-free allowance of up to 10% of the value of the full personal allowance to their higher earning partner. At 2017/18 rates the allowance is worth up to £230 per couple. A couple who claimed now for 2015/16, 2016/17 and 2017/18 would save a total of £662 in income tax.

When the policy was introduced, HMRC estimated that 4.2 million couples stood to gain. But a new FOI response received by Royal London shows that only 2.2 million couples have so far claimed, suggesting around two million couples could still benefit. Assuming that each couple took advantage of the ability to backdate to 2015/16, two million couples gaining £662 each would produce a total tax saving to consumers of over £1.3 billion.

The full FOI reply shows the total number of couples claiming the Marriage Allowance were:

2015/16 – 644,916

2016/17 – 1,172,792

2017/18 (to date) – 2,215,358

Commenting, Steve Webb, Director of Policy at Royal London said:

The Government has created a tax break specifically designed to benefit married couples and civil partners, but the take-up of the new allowance is shockingly low. Even in its third year of operation, around two million couples who could benefit from the marriage allowance are not doing so. When family finances are so tight, I would encourage every married couple to check whether they might be eligible, including for the last two years, as they could qualify for a useful lump sum as well as a reduction in their ongoing tax bill.


Notes to editors:
  1. The full FOI reply to Steve Webb is attached.
  2. For more detail on the Marriage Allowance, see www.gov.uk/marriage-allowance
  3. The rates of the Marriage Allowance are:
  Rate of Allowance (per year)
2015/16 £1,060
2016/17 £1,100
2017/18 £1,150

Claims for the Marriage Allowance can still be made for 2015/16 and 2016/17.  Note that a standard rate taxpayer who receives a Marriage Allowance of £1,150 reduces their tax bill by 20% of this amount, or £230 per year.

For further information please contact:

Royal London Press Office

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.