Marriage Allowance – Does the Scottish Budget have any impact?

BLOG16th Feb 2018

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The Marriage Allowance allows the transfer of up to £1,150 of unused personal allowance (£11,500) from one spouse or civil partner to the other. The tax saving could be as much as £230 for a couple in the current tax year.

For the allowance to be available, the recipient spouse must be the higher earner, but must remain a basic rate taxpayer. Therefore their income can be up to £45,000 in England & Wales and £43,000 in Scotland (2017/18 rates), before the allowance is lost. This means that an individual earning £44,000 in England would be entitled to the allowance but a Scottish taxpayer would not.

Further complicating the issue is the impact of the new starter/basic/intermediate income tax bands from April 2018. Our earlier blog sets out the changes in more detail and can be found here.

In brief, the Scottish rates of tax for 2018/19 onwards are as follows:-

Income (£) Name Rate (%)
Below £11,850 N/A 0
£11,850 – £13,850 Starter 19
£13,851 – £24,000 Basic 20
£24,001 – £44,273 Intermediate 21
£44,274 – £150,000 Higher 41
Above £150,000 Top 46


As the allowance is only available to “basic” rate taxpayers, strictly those who fall into the “intermediate” rate do not qualify. The impact of this is a significantly different income cut off point for those north of the border from April 2018 (£24,000 as opposed to £46,350).

Westminster has confirmed that it intends for intermediate taxpayers to qualify for the marriage allowance and will be consulting with the Scottish Government as to how to implement this.

This at least deals with one of the many queries thrown up by the introduction of multiple tax rates by the Scottish Government but similar issues apply to pension and gift aid relief amongst others. Confirmation of how these will be dealt with under Scotland’s new tax regime are still to be confirmed.

For more information contact Jill Walker or your usual AAB contact.

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