State pensioners earning under £50,270 could be missing out on valuable HMRC 'perk'

Pensioners have been reminded that they can save on their State Pension by utilising a little known perk. This often-overlooked HMRC benefit could reduce state pensioners' tax bill by as much as £252.

The personal allowance is the amount of income you can earn without having to pay any tax at all, currently set at £12,570 for anyone earning under £100,000 a year after pensions and other deductions. Any income above this personal allowance is taxed at the individual's marginal rate, which is 20% on income between £12,571 and £50,270, with higher rates applied to earnings beyond this.

However, if you or your partner earn more than £50,270, you cannot benefit from the marriage allowance perk. The Marriage Allowance allows a non-taxpayer to transfer £1,260 of their Personal Allowance to their spouse or civil partner if they are a basic rate taxpayer, thereby increasing their Personal Allowance and reducing their taxable income.

This is particularly relevant for married couples where one partner stays at home to care for children, but it's also important for those who are retiring or retired, and find themselves as a basic rate taxpayer with a spouse who is a non-taxpayer. This is common as many higher rate taxpayers aim to manage their income so they become basic rate taxpayers in retirement.

Currently, if the non-taxpayer receives the full current State Pension of £10,636.60 per annum and transfers £1,260 to their basic rate taxpaying spouse or civil partner, this will still fall within their personal allowance of £12,570 per annum. This move saves the basic rate taxpayer £252 in tax and can be back-dated four years if applicable, reports Birmingham Live.

If you require assistance, either with claiming the allowance or reporting a change of circumstances, you can contact the helpline on: 0300 200 3300.