- The TV money guru said the tax break applied to 2.1 million couples
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Martin Lewis has issued an urgent warning to British couples who could be missing out on a £1,260 tax break.
The Manchester-born finance guru, 52, revealed the tip to excited viewers on an episode of The Martin Lewis Money Show.
According to the money man, married couples or those in a civil partnership - provided one partner was born after April 5 1935 - could be eligible to earn £252 each tax year.
Perhaps even more thrilling is that you can backdate your claim by up to four years, resulting in an astounding £,1260 total gain.
To be eligible, one partner must be a non tax payer, while the other should be paying the basic 20 per cent tax from their salary.
To apply for the 'Marriage Allowance', the non tax payer must head to gov.uk and fill out an application form.
There is however one nagging thing - you've got to apply before the end of the tax year which cuts off on April 5th.
In a snippet captured on X, Martin explained: 'It works provided one of you is aged under around 90. Specifically one of you needs to have been born under the 5th of April 1935' he said.
Martin Lewis (pictured) has issued an urgent warning to British couples who could be missing out on a £1,260 tax break
He then broke down important details such as each person's 'personal allowance' and the set income needed to be eligible.
A personal allowance is the amount you are permitted to earn per year without having to pay tax. Most people have a yearly personal allowance of £12,570.
'One of you needs to be a non-tax payer, so you are not earning your full personal allowance you can earn before you start paying tax on it' said Martin.
For those who work part-time or volunteer, the TV host ensured they could still be eligible as long as 'you don't pay income tax'.
'The other [partner] needs to be paying the highest rate of tax they pay - the basic 20 per cent rate of tax' he explained.
'Then what happens is this... each of you have your £12,570 personal allowance - that's the amount you can earn that you don't pay tax on each year'.
He revealed the next step was crucial to gaining the tax break, and advised watchers to take note.
'So the non tax payer can apply to gov.uk to move 10 per cent of their tax free allowance across to the basic rate tax payer'.
According to the money man, married couples or those in a civil partnership - provided one partner was born after April 5 1935 - could be eligible to earn £252 each tax year (stock image)
This would reduce the non taxpayer's personal allowance to £11,310, while increasing the tax payer's combined tax-free allowance to £13,830.
This extends their personal tax-free allowance from £12,570 to £13,830, thus reducing the overall amount they will pay have to pay income tax on for the year.
'Remember they would have paid tax on it at 20 per cent' he added.
'So the gain there is £252 a year'. And pointing to an explanatory diagram, he said 'as long as the person on this side [the basic tax payer] is earning over £13,830, you're always going to be net up if there's a non tax payer and a taxpayer'.
He then delighted viewers with the news that eligible couples could backdate claims to the past four years, meaning they could gain a whopping £1,260 from a total of five tax years.
The major update could affect as many as 2.1 million couples, who Martin warned should fill in application forms 'quickly'.
According to the gov.uk, a Marriage Allowance works by allowing you to transfer £1,260 of your personal (tax free) allowance to your husband, wife or civil partner (pictured: The Martin Lewis Money Show)
'Now you need to do this quickly because this year, it's each tax year, and the tax year ends on the 5th of April' he said.
But a spanner in the works means you may have to set a reminder to apply at a later date.
While Martin directed viewers to gov.uk to fill out the form, he said that the application system was down for two weeks owing to essential maintenance works. 'Terrible timing' he joked.
He added that those who applied by post and were yet to receive a response after three months should contact their local government office again.
According to the gov.uk, a Marriage Allowance works by allowing you to transfer £1,260 of your personal (tax free) allowance to your husband, wife or civil partner.
This would then reduce the amount of tax you have to pay per tax year by up to £252.
'To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance - this is usually £12,570' explained the site.
It also warned: 'When you transfer some of your personal allowance to your husband, wife or civil partner you might have to pay more tax yourself, but you could still pay less as a couple'.
For anyone having trouble understanding the tax break, the government website provided a detailed example.
'Your income is £11,500 and your personal allowance is £12,570, so you do not pay tax' it read.
'Your partner’s income is £20,000 and their personal allowance is £12,570, so they pay tax on £7,430 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,430.
'When you claim Marriage Allowance you transfer £1,260 of your personal allowance to your partner. Your personal allowance becomes £11,310 and your partner gets a tax credit on £1,260 of their taxable income.
'This means you will now pay tax on £190, but your partner will only pay tax on £6,170. As a couple you benefit, as you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax'.
