What I told the Chancellor he should do to improve the marriage tax allowance take-up

Introduced in April 2015, the marriage tax allowance (MTA) is free cash worth £432 for many married couples and those in civil partnerships. Yet surprisingly only 16% of the 4.2 million eligible have claimed it.

I’ve been talking about it a lot (well, free cash is free cash), and a good chunk of the low uptake is people simply haven’t heard of it. But the feedback I’ve had on it shows a number of small tweaks could make the whole thing easier and more popular.

Recently while meeting the Chancellor over mortgage affordability rules, we got into a conversation about the low take-up and I made a few suggestions. He asked the Treasury to follow up and last week I spoke to someone senior on the MTA team to feed in suggestions.

So I thought I would quickly note down my suggestions here, so there’s a record. Worth noting too while some may think the Govt wants low take-up as it saves them money, the opposite is true. This was their policy and it’s in their vested interest to make it work.

PS: For more on how MTA works, read my marriage tax allowance guide. In a nutshell though, what you need to know is that a non-taxpayer can pass on some of their tax-free allowance to the taxpayer. From now on I assume you understand it.

Before I go on, it’s worth noting the MTA is deliberate discrimination against many long-term unmarried couples – a choice by the Government to reward marriage in the tax system, as they believe it’s more stable.

The fact I communicate the MTA doesn’t mean I agree with the policy. Just my job is to tell people how to save money and this does that.

Anyway, onto my suggested tweaks.

1. Stop asking people to apply.

The call to arms of the MTA’s marketing and advertising is to apply and the fact it only takes 10 minutes.

Yet apply is a scary word. I suspect many people believe that to click the button they must be sure they’re eligible. As there’s huge confusion over this, that’s very off-putting, especially as people are very scared of applying for a tax-saving they think they may not be due.

Actually, when you do apply, the first stage is a quick check to see if you’re eligible. So why not call it that. Just have the call to arms and the link being called “Do a two-minute check to see if you’re eligible”, to prevent drop out at that stage.

2. Don’t automatically reject people if their income is too high.

As the application is supposed to be done by the non-taxpayer, the form has a question asking if you earn less than £11,000. If you don’t, it tells you you’re not eligible.

Though often people don’t realise who should apply, and it’s the taxpayer who sits down to fill in the form (as often they tend to be the one who focuses on it more), so they input their income and get a no. I’ve even had angry messages from people telling me I don’t know what I’m talking about because of this.

So instead of automatically rejecting people at that point, also include at this point an error message, something like, “If your spouse is the non-taxpayer, they are the one who must do this application”.

3. Explain what ‘non-taxpayer’ is on the form.

Since talking about the MTA I’ve been staggered that many people seem to want to find an excuse as to why they’re not eligible.

Much of this revolves around “What counts as a non-taxpayer?” – even though the definition is simply someone who doesn’t pay income tax (ie, usually earning under £11,000 a year).

I get many questions about eligibility that start “I’m a non-taxpayer, but…”; “I volunteer”; “I work”; “I don’t work”; “I work part time”; “I used to be a higher-rate taxpayer”; “I may restart work”. My answer is simple. If you’re a non-taxpayer, you’re eligible.

The eligibility section of the form therefore needs to be tweaked to make people more comfortable about this.

4. Allow people to apply for a cheque online.

You can retrospectively apply for last year’s £212 allowance. If you apply online this will be done by altering this year’s tax code (so you gradually get the money across the year), but call up the helpline and you can get a cheque.

A cheque is much more appealing to most people, so why not just put a box on the online form allowing it? This can then be used in the marketing – the call of quick cash is a great way to spur people into action; and will also see more people talk to their friends about it.

In some ways doing the whole thing by cheque (not just last year’s cash) would also improve take up.

Update: HMRC says that it’s changed this in the past few weeks and if you apply retrospectively you can either get a cheque or bank transfer whether you applied online or on the phone.

5. Change the ads from “£220 marriage tax allowance” to “£432”.

The vast majority of people who haven’t claimed were eligible for last year’s, as well as this year’s. That means claim now and they get £432. So why not say so (with the obvious caveats)?

I suspect this amount of money is enough to trigger a whole other group of people to take it seriously.

Do let me know what you think of these suggestions either below or via @martinslewis and if you can see any other blocker in the process.