The aim of this blog post is to help readers in learning about how one can cancel their Marriage Tax Allowance. To discuss this in detail, we will explore the situations in which you would need to cancel a Marriage Tax Allowance as well as review the steps involved in the cancellation process.

How Can You Cancel Marriage Tax Allowance?

If you need to cancel your Marriage Tax Allowance, you should contact the HMRC at the earliest possible. You can do this by choosing any of the following ways: 

  • calling the HMRC on 0300 200 3300 if you live in the UK
  • calling the HMRC on +44 135 535 9022 if you live outside the UK
  • using your Government Gateway account through the HMRC website

You can also write to them and post your query/concern addressed to the following:

Pay As You Earn and Self Assessment

HM Revenue and Customs

BX9 1AS

You will need to prove your identity to the HMRC when you file for the cancellation of your Marriage Tax Allowance.

In case a marriage ends due to the death of one of the spouses or divorce, the Marriage Tax Allowance will automatically be cancelled by the authorities. 

If you cancel your Marriage Tax Allowance due to a change in income, you will be able to continue benefiting from it until the end of the tax term (April 5th). 

If you cease to be eligible for Marriage Tax Allowance in the middle of the tax term you will have to wait until the HMRC sends you a P800 at the end of the tax term which reconciles your financial situation. They can then recover the overpaid amount during the next tax term. 

If you cancel your Marriage Tax Allowance due to the end of a relationship, it will be backdated until the beginning of the tax term. This means that one of the partners will end up underpaying their tax during this time.

How Marriage Tax Allowance works is that individuals who are married or in a civil partnership and both earn less than £12,570 a year, can claim to be eligible for the Marriage Tax Allowance. This allows the partner with a higher income to transfer £1,260 of their personal allowance to their spouse. This allows couples to save around £252 on their tax bill.

However, you may need to cancel your Marriage Tax Allowance if your circumstances change. For example, if you divorce or your spouse dies, you will no longer be eligible for the allowance. You can cancel your allowance by contacting HMRC.

The time limits to cancel a Marriage Tax Allowance are as follows:

  • If you cancel on or before the first anniversary of the marriage, you will receive a full refund of the tax allowance.
  • If you cancel after the first anniversary of the marriage, you will receive a partial refund of the tax allowance.
  • If you cancel after the second anniversary of the marriage, you will not receive a refund of the tax allowance.

It is important to note here that the partner who applies for a Marriage Tax Allowance qualifies to cancel it. The only exception to this rule is when the partner who applied for it has passed away.

What Are The Reasons For Cancelling A Marriage Tax Allowance?

There are a number of reasons why a couple might choose to cancel their Marriage Tax Allowance. For example, if one partner earns significantly more than the other, it might be more beneficial for them to claim the single person’s allowance instead. Alternatively, if a couple is separated or divorced, they will no longer be eligible for the allowance.

Below are some reasons for cancelling a Marriage Tax Allowance:

  • the relationship with your partner ends (this can either be because you have divorced, dissolved your civil partnership or are legally separated
  • You are no longer eligible due to an increase in your income either due to increased working hours or becoming employed
  • Your partner becomes a higher-rate taxpayer by earning more than £50,000 annually
  • you do not need to claim it anymore

In some cases, it might be more beneficial for them to claim the single person’s allowance instead.

Will My Tax Code Change If I Cancel My Marriage Tax Allowance?

Yes, your tax code will change if you cancel your Marriage Tax Allowance. However, it will not be done automatically and you will need to contact HMRC and update your tax code. This is because the amount of tax you pay is based on your personal circumstances, and cancelling your Marriage Tax Allowance will change your tax code.

When you take advantage of the Marriage Tax Allowance, your tax code is 1125N. This tax code is assigned on the basis of an application for a Marriage Tax Allowance requested by a taxpayer.

It is common among spouses and partners to benefit from the Marriage Tax Allowance under which the partner/spouse who earns less than the Personal Allowance amount of £12,570 transfers 10% of this amount to their higher-earning partner to increase their Personal Allowance or tax-free earnings. In this way, the higher earner will pay a higher amount of tax while the couple will collectively pay a lesser amount of tax.  

You contact the HMRC online when you need to cancel your Marriage Tax Allowance and have your tax code changed.

Conclusion:

The above discussion makes it clear that if you need to cancel your Marriage Tax Allowance, you will need to inform the HMRC at the earliest possible. You can do this by calling them, using your Government Gateway for an online request or posting your request for cancellation at their given address. However, in some cases, it may take some time before your cancellation request is processed and your tax code is changed.

References:

Marriage Tax Allowance: what is it and how does it work?

Marriage Tax Allowance: If your circumstances change – GOV.UK

Marriage Tax Allowance explained – Which?

Five Reasons You Need to Know How To Cancel Marriage Tax Allowance

How do I claim a Marriage Tax Allowance refund? | Low Incomes Tax Reform Group

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