State Pensioners Urged to Claim HMRC Perk to Save Up to £252

State pensioners earning less than £50,270 are being encouraged to take advantage of a tax benefit offered by HM Revenue and Customs (HMRC) that could reduce their tax bill by as much as £252. The reminder comes from the Department for Work and Pensions (DWP), highlighting the often-overlooked Personal Allowance and Marriage Allowance options available to retirees.

The Personal Allowance is the threshold of income an individual can earn before incurring any tax liability. Currently, this amount stands at £12,570 for those earning under £100,000 per year after deductions such as pensions. Income exceeding this threshold is taxed at a marginal rate of 20% for earnings between £12,571 and £50,270, with higher rates applying to larger incomes.

For couples, the Marriage Allowance offers a strategic financial advantage. If one partner is a non-taxpayer, they can transfer £1,260 of their Personal Allowance to their spouse or civil partner, provided the other partner is a basic rate taxpayer. This transfer effectively increases the partner’s Personal Allowance, which may result in reduced taxable income. A common example includes a married couple where one partner stays home to care for children, but this situation also applies to retirees managing their income to remain within the basic rate tax bracket.

For instance, a retiree receiving the full State Pension of £10,636.60 annually can transfer £1,260 to their spouse or civil partner. This adjustment keeps the combined income within the £12,570 Personal Allowance limit, allowing the basic rate taxpayer to save £252 in taxes. Notably, this benefit can be backdated for up to four years if applicable.

Individuals seeking assistance with claiming the allowance or reporting changes in circumstances can contact HMRC’s helpline at 0300 200 3300. With careful financial planning, state pensioners can maximize their income and minimize their tax obligations, potentially leading to significant savings.