Tax Tip

You will only be entitled to the MCA if you or your spouse, or civil partner were born before April 6 1935. Assuming you meet this age requirement and you are entitled to the full Age Related Personal Allowance (AA), then you will also be entitled to the full Married Couples. There are two rates of the allowance (see the table below):

Married Couple’s Allowance (MCA) rates 2008/9 tax year (see note below)

Age of older               Min MCA                Max MCA       Claimant's 
spouse or civil                                                                  income limit
partner (Born
before April
6, 1935)  
    
Under 75                £2,540                      £6,535           £21,800
75 or over               £2,540                      £6,625           £21,800

However, the AA you are entitled to will be reduced by £1 for every £2 that your income exceeds the limit shown in the table above.

If your income exceeds the limit by so much that your AA has to be reduced to the level of the basic personal allowances, i.e. the allowance available to everyone whether they are 65 or over (the basic allowance is £6,035), then a reduction of the MCA will also be due.

The income to be used in calculating the reduction in MCA is that of the spouse or civil partner with the greatest income for the tax year in question. The MCA reduction is at the rate of £1 for every £2 of the remaining excessincome. 

An example: 

Tony is 76, married or in a civil partnership and has taxable income of £30,000.

First subtract the income limit (£21,800) from Tony's taxable income resulting in an excess of £8,200 over the limit.

Take £1 for every £2 over the amount over the limit, i.e. a half of £8,200 = £4,100, and reduce your AA as follows:

Full AA (per table)                                                      £9,180
Total excess income x half  £4,100
Less: maximum reduction  £3,145                       £3,145
Adjusted AA                                                                £6,035 (cannot be lower than the basic personal allowance)
Remaining excess income    £955
 

Take the remaining excess income from your MCA, as follows:
Maximum MCA (per table)                                      £6,625
Less: Remaining excess income                           £955
Adjusted MCA therefore                                          £5,670

The tax relief is given at the rate of 10% of the allowance. Thus in the example above the allowance of £5,670 would reduce your tax bill by £567.
 

If you have anu question relating to any of the above please do not hesitate to get in touch with us and we shall be glad to assist.