A little change might make your household income go further
01 July 2025It is rare for a day to go by these days without a note in the press that more and more folk have been pushed into paying income tax, or indeed into higher rate income tax bands (starting at £50,270 pa gross).
With interest rates remaining elevated in recent years, and with banks and building societies reporting taxable returns to HMRC directly, many savers, particularly pensioners, are moving into the tax system, with a coding notice reduced from the standard 1257L tax code. Remember that a basic rate taxpayer can receive interest of £1,000 gross from all sources and pay no additional tax, and this allowance is reduced to £500 for a higher rate taxpayer (nil for an additional rate taxpayer). Therefore, where appropriate, having savings spread between spouses / civil partners may be worthwhile.
We have a Budget from the Chancellor anticipated in October 2025, and there may be more changes ahead to increase the tax take from individuals into the future. Therefore, where appropriate, using allowances, such as the marriage allowance, might make a difference.
If there is scope, the marriage allowance allows you to transfer part of the nil rate income tax band from one lower earner (below £12,570 pa gross) to a spouse or civil partner who is a basic rate taxpayer (above £12,570 pa gross and up to £50,270 pa gross). The maximum allowance amount that can be transferred is £1,260, and importantly, and if available, you can backdate your claim to April 2021. Based on current legislation, the tax saving achieved can be up to £252 per annum, or just over £20 per month, however this will vary on individual situations. There is a helpful calculator on the website to help you look at what might be achieved.
More of the detail can be found on the government website, along with an online application form, which can be found here: https://www.gov.uk/marriage-allowance
We appreciate that this allowance may not make a big difference to a household’s overall income, but where available, a tax saving is usually still worthwhile and little changes such as these in household financial planning can add value. There may be other tax savings available, noting that this blog focuses on the marriage allowance.
Please do speak to the team at Chapters Financial about your overall financial planning position, needs and aspirations.
No individual advice is provided during the course of this blog.
Keith Churchouse FPFS
Director
CFP Chartered FCSI
Chartered Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899
