How Marriage Allowance affects your student loan repayments and whether transferring your personal allowance saves or costs you money
Marriage Allowance lets you transfer 10% of your Personal Allowance (£1,260 for 2024/25) to your spouse or civil partner, potentially saving up to £252 per year in tax. But if you have student loans, this transfer changes your taxable income—which directly affects your loan repayments. For some couples, Marriage Allowance reduces overall household costs. For others, the increased loan repayments exceed the tax savings, making it counterproductive.
The interaction between Marriage Allowance and student loans is complex because it depends on which loan plan you're on, both partners' incomes, and the repayment thresholds. A couple where one partner has a Plan 1 loan might benefit differently than a couple with Plan 2 or Plan 5 loans. Understanding these dynamics helps you maximize your household finances rather than inadvertently increasing costs.
This guide explains how Marriage Allowance works, calculates the exact impact on different loan plans, provides real-world examples for various couple scenarios, and gives you a clear framework for deciding whether to apply. We'll cover eligibility requirements, application process, potential savings or losses, and the situations where Marriage Allowance makes financial sense despite student loans.
Marriage Allowance is a tax relief that allows married couples and civil partners to optimize their household tax burden by transferring unused Personal Allowance from the lower earner to the higher earner.
Amount transferable:
£1,260 (10% of £12,570 Personal Allowance) for 2024/25
Maximum tax saving:
£252/year (£1,260 × 20% basic rate)
Backdate option:
Can claim for previous 4 tax years = up to £1,242 lump sum
Who benefits:
Couples where one earns under Personal Allowance, other pays basic rate tax
Income limits:
Transferor: under £12,570; Recipient: £12,571-£50,270
Automatic renewal:
Once applied, continues until cancelled or ineligible
Understanding the mechanics helps you see exactly how the allowance transfer affects both partners' tax and loan calculations.
Identify Transferor (Lower Earner)
The partner earning under £12,570 (below Personal Allowance) who isn't using their full allowance. This person will transfer 10% (£1,260) to their partner.
Transferor's Allowance Reduces
Transferor's Personal Allowance drops from £12,570 to £11,310. This means £1,260 more of their income becomes taxable—but if they earn under £11,310, no actual tax impact. If they earn £11,310-£12,570, they pay 20% tax on the excess.
Recipient's Allowance Increases
Higher-earning partner (recipient) receives £1,260 added to their Personal Allowance. Their allowance becomes £13,830 instead of £12,570. This saves them £252 in tax (£1,260 × 20%).
Student Loan Calculation Changes
Student loan repayments are based on income above threshold, NOT tax paid. For transferor: if their income increases into taxable range, loan repayment also increases. For recipient: their loan repayment doesn't change (their income is the same, just their tax reduces).
Scenario: Partner A earns £10,000, Partner B earns £30,000
Without Marriage Allowance:
Partner A: £10,000 income - £12,570 allowance = £0 taxable = £0 tax
Partner B: £30,000 - £12,570 = £17,430 taxable × 20% = £3,486 tax
Household tax: £3,486
With Marriage Allowance:
Partner A: £10,000 - £11,310 = £0 taxable = £0 tax (still under allowance)
Partner B: £30,000 - £13,830 = £16,170 taxable × 20% = £3,234 tax
Household tax: £3,234
Household saves: £252/year
Scenario: Partner A earns £10,000 with Plan 2 loan, Partner B earns £30,000 with no loan
Partner A's loan situation:
Plan 2 threshold: £27,295
Income £10,000 is far below threshold
Even with reduced allowance (£11,310), still no loan repayment required
Loan cost impact: £0
Partner B tax saving: £252
Net household benefit: £252 (same as without loans)
Why? Partner A's income so far below loan threshold that allowance change is irrelevant for loan repayment.
The effect on student loan repayments depends entirely on which partner has loans, what plan they're on, and their income relative to thresholds.
| Loan Plan | Threshold | Rate | Maximum Annual Impact |
|---|---|---|---|
| Plan 1 | £22,015 | 9% | £113.40 (£1,260 × 9%) |
| Plan 2 | £27,295 | 9% | £113.40 (£1,260 × 9%) |
| Plan 4 | £31,395 | 9% | £113.40 (£1,260 × 9%) |
| Plan 5 | £25,000 | 9% | £113.40 (£1,260 × 9%) |
| Postgraduate | £21,000 | 6% | £75.60 (£1,260 × 6%) |
Key insight: If transferor earns above their loan threshold, Marriage Allowance increases their repayments by up to £113.40/year (undergraduate) or £75.60/year (postgraduate). Tax saving is £252, so net household benefit is £138.60-£176.40 if only transferor has loan.
The reduced Personal Allowance only matters for student loan calculations if it changes whether you're above or below the threshold:
Scenario A: Income well below threshold
Example: Plan 2 borrower earning £20,000 (threshold £27,295)
Before allowance: £20,000, no repayment
After allowance: £20,000 (income unchanged), still no repayment
Impact: £0 — allowance is irrelevant to loan calculation
Scenario B: Income above threshold but below old allowance
Example: Plan 2 borrower earning £28,000 (threshold £27,295)
Before: Repay 9% of (£28,000 - £27,295) = £63.45/year
After: Still £28,000 income (unchanged) = same £63.45/year
Impact: £0 — income, not allowance, determines loan repayment
Scenario C: Income in the "transfer zone (£11,310-£12,570)
Example: Plan 1 borrower earning £23,000 (threshold £22,015)
The allowance change creates taxable income where there was none
But loan already being repaid on £23,000 income
Allowance reduction means paying tax on extra £1,260, but loan calculation unchanged
Impact: Pay £252 extra tax, but transferor receives nothing back — actually costs household!
Not all couples can use Marriage Allowance. Here are the requirements:
Married or in civil partnership: Must be legally married or in a civil partnership. Cohabiting couples not eligible, even if you 've lived together for years.
Lower earner under Personal Allowance: Transferor must earn less than £12,570 (not using full Personal Allowance). If you earn £12,570 or more, you can't transfer any allowance.
Higher earner is basic rate taxpayer: Recipient must earn between £12,571 and £50,270 (basic rate band). If they earn over £50,270, they're a higher rate taxpayer and can't receive Marriage Allowance.
Both UK resident for tax: Both partners must be UK residents for tax purposes (or one UK resident, one claiming under certain reciprocal agreements).
Not claiming Married Couple's Allowance: Different from Marriage Allowance—if either of you were born before April 6, 1935, you may be entitled to the more generous Married Couple's Allowance instead (can't claim both).
Transferor (Lower Earner) Must Earn:
• Under £12,570 to have unused allowance
• Ideally under £11,310 to avoid becoming taxable
• Can be £0 (non-working partner qualifies)
Examples:
✓ £0 income: Qualifies
✓ £8,000 income: Qualifies
✓ £12,500 income: Qualifies (just under limit)
✗ £13,000 income: Doesn't qualify (above £12,570)
Recipient (Higher Earner) Must Earn:
• Between £12,571 and £50,270
• Must be paying basic rate (20%) tax
• Over £50,270 makes you higher rate taxpayer (ineligible)
Examples:
✓ £25,000 income: Qualifies
✓ £35,000 income: Qualifies
✓ £48,000 income: Qualifies
✗ £55,000 income: Doesn't qualify (higher rate)
One partner self-employed:
Use total profit from self-employment (not turnover). If profit is under £12,570, you can transfer allowance. Marriage Allowance is separate from Self Assessment tax obligations.
Maternity/paternity leave:
If one partner on statutory pay (earning under £12,570 that year), they can transfer allowance for that tax year. Useful for families where income drops during parental leave.
Mid-year income change:
If recipient gets pay rise above £50,270 mid-year, they become ineligible. HMRC will adjust and claw back benefit. Must notify HMRC within 2 months of change.
Both partners part-time:
If both earn under £12,570, neither can transfer (both "non-taxpayers"). If one earns £13,000 and other £10,000, the £10,000 earner can transfer to the £13,000 earner (who must be basic rate).
Real numbers showing exactly how Marriage Allowance and student loans interact in different scenarios:
Setup:
Without Marriage Allowance:
Partner A:
• Income: £12,000
• Personal Allowance: £12,570
• Taxable income: £0 (£12,000 - £12,570)
• Tax paid: £0
• Plan 2 threshold: £27,295 (income far below)
• Loan repayment: £0
Partner B:
• Income: £40,000
• Personal Allowance: £12,570
• Taxable income: £27,430 (£40,000 - £12,570)
• Tax paid: £5,486 (£27,430 × 20%)
• No loan: £0 repayment
Household total: £5,486 tax + £0 loan = £5,486
With Marriage Allowance:
Partner A (transfers £1,260):
• Income: £12,000
• Personal Allowance: £11,310 (reduced)
• Taxable income: £690 (£12,000 - £11,310)
• Tax paid: £138 (£690 × 20%)
• Plan 2 threshold: £27,295 (still far below)
• Loan repayment: £0 (no change)
Partner B (receives £1,260):
• Income: £40,000
• Personal Allowance: £13,830 (increased)
• Taxable income: £26,170 (£40,000 - £13,830)
• Tax paid: £5,234 (£26,170 × 20%)
• No loan: £0 repayment
Household total: £138 + £5,234 tax = £5,372
Net household saving: £114/year
Partner A pays £138 more tax, Partner B saves £252, net gain £114. Student loan repayment unchanged (income far below threshold).
Setup:
Without Marriage Allowance:
Partner A:
• Income: £11,500
• Below Personal Allowance (£12,570): No tax
• Plan 1 threshold: £22,015 (below threshold)
• Loan repayment: £0
Partner B:
• Income: £32,000
• Tax: £3,886 ((£32,000 - £12,570) × 20%)
• Plan 2 threshold: £27,295
• Above threshold by: £4,705
• Loan repayment: £423 (£4,705 × 9%)
Household: £3,886 tax + £423 loan = £4,309
With Marriage Allowance:
Partner A:
• Income: £11,500
• Reduced allowance: £11,310
• Taxable income: £190
• Tax: £38 (£190 × 20%)
• Plan 1 threshold: £22,015 (still below)
• Loan repayment: £0 (no change)
Partner B:
• Income: £32,000
• Increased allowance: £13,830
• Tax: £3,634 ((£32,000 - £13,830) × 20%)
• Plan 2 threshold: £27,295 (unchanged by allowance)
• Loan repayment: £423 (no change—based on income, not allowance)
Household: £38 + £3,634 tax + £423 loan = £4,095
Net household saving: £214/year
Partner A pays £38 more tax but no change in loan. Partner B saves £252 tax, loan unchanged. Net gain £214. Key: neither partner's loan situation changes because income relative to threshold is unchanged.
Setup:
Without Marriage Allowance:
Partner A:
• Income: £26,000
• Tax: £2,686 ((£26,000 - £12,570) × 20%)
• Plan 2 threshold: £27,295
• Below threshold by £1,295
• Loan repayment: £0
Partner B:
• Income: £38,000
• Tax: £5,086 ((£38,000 - £12,570) × 20%)
• No loan
Household: £2,686 + £5,086 = £7,772
With Marriage Allowance:
Partner A:
• Income: £26,000 (unchanged)
• Reduced allowance: £11,310
• Taxable income: £14,690
• Tax: £2,938 (£14,690 × 20%)
• Plan 2 threshold: £27,295
• Still below threshold (income unchanged)
• Loan repayment: £0 (no change)
Partner B:
• Tax: £4,834 ((£38,000 - £13,830) × 20%)
• Saves £252
Household: £2,938 + £4,834 = £7,772
Net household change: £0
Partner A pays £252 more tax, Partner B saves £252—exact wash. Loan unchanged because income (not allowance) determines threshold position. In this case, Marriage Allowance offers no net benefit but also no harm.
Setup:
Without Marriage Allowance:
Partner A: £0 income, no tax, no loan
Partner B: £35,000 income
• Tax: £4,486
• Loan: (£35,000 - £27,295) × 9% = £693
Household: £4,486 + £693 = £5,179
With Marriage Allowance:
Partner A: £0 income, reduced allowance irrelevant (no income to tax)
Partner B: £35,000 income
• Tax: £4,234 (saves £252)
• Loan: Still £693 (income unchanged)
Household: £4,234 + £693 = £4,927
Net household saving: £252/year
Perfect scenario: Partner A has no income so reduced allowance costs nothing. Partner B gets full £252 tax saving. Loan repayment unchanged. This is the ideal use case for Marriage Allowance.
Applying is straightforward and takes about 10 minutes online. Here's the step-by-step process:
Go to GOV.UK Marriage Allowance Service
Visit: www.gov.uk/apply-marriage-allowance. The lower earner (transferor) must apply—they're transferring their allowance.
Confirm Eligibility
System asks questions to verify: married/civil partnership, income levels, neither claiming other allowances. Answer honestly—HMRC will verify.
Provide Partner Details
Enter your partner's name, date of birth, and National Insurance number. They'll receive notification of your application and must accept it.
Partner Accepts
Your partner receives email/letter from HMRC. They must confirm they want to receive the allowance. Usually automatic approval if they don't object within 30 days.
HMRC Processes Application
Takes 2-4 weeks. HMRC adjusts both partners ' tax codes. You'll see updated codes on payslips starting next month or next tax year depending on timing.
Backdate Claim (Optional)
During application, option to claim for previous 4 tax years if you were eligible. Can result in lump-sum payment of up to £1,242 (£252 × 4 years, adjusted for rates).
Tax Codes Change:
Transferor: Tax code adjusts from 1257L to approximately 1131L (reflecting £11,310 allowance). Recipient: Tax code adjusts from 1257L to approximately 1383N (reflecting £13,830 allowance + 'N ' suffix indicating Marriage Allowance receiver).
Payslip Impact:
You'll see changes within 1-2 months. Transferor may see slightly more tax deducted (if earning £11,310-£12,570). Recipient sees less tax deducted (extra ~£21/month take-home).
Automatic Renewal:
Marriage Allowance continues automatically each tax year until you cancel, separate, or become ineligible. No need to reapply annually.
Student Loan Deductions:
Continue as normal. Loan repayment based on gross income (unchanged by Marriage Allowance). If transferor's income was already above loan threshold, repayment amount doesn't change.
You can cancel at any time if circumstances change:
Real-world situations showing when Marriage Allowance works (or doesn't) with student loans:
Situation:
Sarah on maternity leave earning £8,000 statutory pay (Plan 2 loan £25,000). Partner Tom earns £42,000 (Plan 2 loan £32,000).
Analysis:
Decision: Apply for Marriage Allowance
Outcome: Household saves full £252/year. Perfect scenario—low income partner transfers allowance at zero cost to themselves. Backdating to start of maternity leave year adds extra money.
Situation:
Jamie works part-time earning £18,000 (Plan 1 loan £8,000 remaining). Partner Alex earns £45,000 full-time (no student loan).
Analysis:
Decision: Cannot apply (Jamie earns too much)
Outcome: Ineligible. Even though Jamie earns less than Alex, £18,000 is above Personal Allowance limit. Marriage Allowance only for couples where lower earner is under £12,570.
Situation:
Emma self-employed earning £10,500 profit (Plan 2 loan £38,000). Partner David employed earning £36,000 (no loan).
Analysis:
Decision: Apply for Marriage Allowance
Outcome: Full £252/year household saving. Emma's self-employment income low enough that allowance transfer costs nothing. Important: Must use net profit, not turnover, for income calculation.
Situation:
Partner A earns £52,000 (Plan 2 loan £45,000). Partner B earns £48,000 (Plan 2 loan £38,000).
Analysis:
Decision: Ineligible
Outcome: Both partners earn too much. Neither qualifies. Marriage Allowance designed for couples with income disparity, not high dual earners.
Situation:
Chris earns £12,400 with Postgraduate Loan £18,000. Partner Jordan earns £34,000 with no loan.
Analysis:
Decision: Apply (marginal benefit)
Outcome: Net household gain £34/year (£252 - £218). Small benefit, but positive. Chris's loan unaffected (income far below threshold). Worth applying, especially if backdating previous years.
Use this flowchart approach to decide if Marriage Allowance makes sense for your household:
Step 1: Check Basic Eligibility
□ Married or in civil partnership? (If no → Stop, ineligible)
□ Lower earner under £12,570? (If no → Stop, ineligible)
□ Higher earner £12,571-£50,270? (If no → Stop, ineligible)
All yes? → Continue to Step 2
Step 2: Evaluate Lower Earner's Position
Q: Does lower earner have student loan?
• If NO: Go straight to Step 4 (likely beneficial)
• If YES: Continue to next question
Q: Is lower earner's income far below their loan threshold?
• Plan 1 threshold: £22,015
• Plan 2 threshold: £27,295
• Plan 4 threshold: £31,395
• Plan 5 threshold: £25,000
• Postgrad threshold: £21,000
If income £5,000+ below threshold → Proceed to Step 3
If income within £2,000 of threshold → Calculate carefully (Step 3)
Step 3: Calculate Net Household Impact
Formula:
A. Tax saving for higher earner: £252
B. Extra tax for lower earner (if income £11,310-£12,570):
(Income - £11,310) × 20% = B
C. Extra loan cost for lower earner (if above threshold):
0 if income below threshold, or (Income - Threshold) × 9% = C
Net household benefit = A - B - C
If result is positive, Marriage Allowance saves money. If negative, it costs money.
Step 4: Make Decision
✓ Apply if:
✗ Don't apply if:
Step 5: Consider Backdating
If you 've been eligible for previous 4 tax years, can claim:
Even if current year benefit is marginal, backdating might make it worthwhile. HMRC processes backdate claims within 6-8 weeks.
If lower earner has NO student loan:
Almost always beneficial. Apply unless they earn exactly in the £11,310-£12,570 range.
If lower earner earns under £10,000:
Full £252 benefit regardless of loan status. Definitely apply.
If both partners have loans but both above threshold:
Allowance transfer doesn't affect either's loan repayment (based on income, not allowance). Full £252 benefit minus any extra tax on transferor.
If uncertain:
Use our calculator to model exact scenario, or apply and monitor payslips—you can cancel anytime if it's not beneficial.
Marriage Allowance continues automatically, but review annually to ensure still beneficial:
For couples where the lower earner has no student loan or earns far below any threshold, Marriage Allowance delivers full tax savings with no downsides. For couples where both have loans or the lower earner is near thresholds, careful calculation is needed to ensure net household benefit.
The interaction between Personal Allowance changes and student loan repayments is subtle but important. Take 10 minutes to calculate your specific situation—potential £252/year (£10,080 over 40 years) makes it worth the analysis.
UK Education Policy Specialist
With over 15 years of experience in UK education policy and student finance, Dr. Sharma founded Student Loan Calculator UK to help students navigate the complex world of student loans.