Here's some United Kingdom news that's much more exciting than the blowout NFL game played today in London.
Two million married couples in Great Britain are missing out on their share of £1.3 billion ($1.76 billion U.S.) available via a marriage tax break.
Those unclaimed billions were calculated by Royal London insurance group after it received data from HM Revenue and Customs (HMRC; the U.K. version of America's Internal Revenue Service) following a freedom of information request.
HMRC figures show that only 2.2 million couples have so far claimed the marriage allowance. When this British tax break was created in 2015, it was estimated that 4.2 million couples stood to save on their taxes.
U.K. version of U.S. marriage tax penalty: The allowance helps married couples, as well as those in registered civil partnerships, when one spouse/partner is the breadwinner or the lower-earning partner makes less than the annual personal allowance, which currently is £11,500 ($15,536 U.S.).
This looks to be analogous to the U.S. marriage tax penalty (or bonus, depending on your and your spouse's income situation). American lawmakers helped ease the penalty by making the standard tax deduction for joint filers double that of a single taxpayer. More importantly, the maximum income in the 10 percent and 15 percent tax brackets for joint filers also was increased to double that of a single filer. That effectively means that couples in these lower brackets are taxed as if they were still single taxpayers.
In Great Britain, the lower earner can transfer any unused tax-free allowance of up to 10 per cent of the value of the full personal allowance to their higher-earning partner.
Royal London computations indicate that if each eligible couple filed for the unclaimed 2015/16 allowance, two million couples could potentially gain £662 ($894 U.S.).
Questions as to why unclaimed: "The take-up of the new allowance is shockingly low," said Sir Steve Webb, a former pensions minister and current director of policy at Royal London, in announcing his company's findings.
"When family finances are so tight, I would encourage every married couple to check whether they might be eligible, including for the last two years, as they could qualify for a useful lump sum as well as a reduction in their ongoing tax bill," added Webb.
HMRC says applications have increased year to year. Critics, however, contend that the government hasn't effectively publicized the tax break.
You and your spouse or partner can learn more about the marriage allowance at the special Gov.UK page.
You also might find these items of interest:
- U.S. & U.K. share similar tax law complexity problems
- Beckhams, other UK celebs face possible tax bills in alleged tax avoidance film investment deal
- British man's £14 trillion tax bill highlights steps anyone, anywhere should take upon tax notice receipt
