The marriage allowance is a tax reducer of £250. Is this the case if the transferee pays 7.5% tax on dividends only? Suppose that wife earns salary of £9,996 and transfers marriage allowance to husband who earns salary of £9,996 but has dividend income of £27,500. He pays 7.5% tax on his dividends. Does he receive the full benefit of the marriage allowance transfer (i.e. £1,250 x 20%) reducing his tax by £250? 

Arthur Weller replies:  

If you look at HMRC’s information here, you can see that since the transferee (the husband) is a basic rate taxpayer, the wife can transfer the full marriage allowance of £1,250 to him to reduce his taxable income.