Commentary

E1.910B Transferable tax allowance (also known as the 'marriage allowance')

Personal and employment tax

E1.910B Transferable tax allowance (also known as the 'marriage allowance')

E1.910B Transferable tax allowance (also known as the 'marriage allowance')

Introduction

Following the introduction of independent taxation in 1990, every individual who meets the residence conditions and income conditions discussed below can claim the personal allowance. The allowance is deducted at Step 3 of the income tax computation in ITA 2007, s 23 (ie deducted from net income, see E1.101B)1.

From 6 April 2015 onwards, in certain circumstances it is possible for one spouse or civil partner to transfer 10% of his personal allowance (rounded up to the nearest £10) to the other person under the transferable tax allowance provisions. Unlike the personal allowance, the transferee receives relief for the amount transferred by way of a 20% tax reduction at Step 6 of the income tax computation. Therefore, although the transferor's personal allowance is reduced, the transferee's personal allowance is not increased.2

The transferable amount of the personal allowance is £1,260 in 2021/22 and is frozen at this level until 5 April 20263. The ransferable amount for earlier years is given in T6.108 and T6.110.

Note that as far as tax devolution in Scotland and Wales is concerned, the personal allowance and transferable tax allowance are reserved matters, which means the level of the allowances are set by the UK Government.

The transferable tax allowance (also referred to as the 'marriage allowance') is discussed below. For details of the personal allowance, see E1.910.

Entitlement to tax reduction

In order for the transfer to be effective and the transferee spouse (referred to as the 'gaining party'

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