HMRC tax break that can boost income for married older Brits by £252 a year

Approximately 2 million Brits are eligible for an underutilised tax relief scheme from HM Revenue and Customs (HMRC) known as the Marriage Tax Allowance, but fail to claim it. This government initiative allows couples to transfer their unused personal tax allowance to their spouse.

Despite being available to couples of all ages, many older Brits are unaware that it can be used to avoid up to £252 in tax on their retirement incomes, potentially eliminating any tax on fixed private and State Pension incomes. This lesser-known tax rule is particularly beneficial when there's an income disparity between a husband, wife, or civil partner.

The marriage tax break permits a spouse to transfer as much as £1260 of their unused personal tax allowance to their partner, increasing their tax-free income threshold. With the personal tax allowance currently standing at £12,570 for those earning under £100,000, this can enhance the total household income for married older Brits where one person in the partnership has a smaller pension income, which often falls significantly below this annual threshold.

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It's worth noting that if either spouse earns over £50,270, this tax break doesn't apply, but few pension claimants will need to consider this. For those earning under this threshold, the maximum amount of tax-free income rises to £13,830 for the higher-earning spouse.

Transferring the maximum amount could result in an annual tax saving of £252, according to The Sun. This could be a significant help for the thousands of elderly individuals who have lost access to the Winter Fuel Payment following Labour's decision to limit the benefit as a cost-cutting measure.

Previously a universal benefit for older people, now only the poorest pensioners will receive the £200 to £300 cash assistance for their heating bills. Pensioners are taxed in the same way as working-age Brits.

Who can claim the Marriage Tax Allowance

In partnerships where one person receives the full State Pension of £11,502.40 without other income, they would be able to transfer £1260 of their unused tax allowance to their partner, thereby increasing their monthly income.

The Marriage Tax Allowance is an HMRC tax break available to anyone who is married or in a civil partnership where one person pays income tax at the basic rate of 20 per cent, while the other earns under £12,570.

The basic rate of income tax applies to all incomes under £50,270. Anyone who has missed out on this tax break and qualified in previous years can even backdate their claim as far as April 5 2020 - meaning they could be owed as much as £1008 by the taxman.

Once the tax break is in place, it will automatically apply to the higher earner's tax-free income going forward, or until you cancel the Marriage Tax Allowance. This could be due to a change in income or the ending of the relationship.

Applying for the underused tax break is simple and can be completed online. HMRC advises people to check their eligibility "in 30 seconds" with their Marriage Allowance calculator.

Then couples can apply through the HMRC website or by calling 0300 200 3300. You'll need your National Insurance number and ID to hand.