According to tax specialists, HMRC is purportedly targeting around two million married couples in a new tax crackdown, and many are unaware of the approaching threat.
HMRC Targets Two Million Couples in Tax Crackdown
Two million married couples and civil partners benefiting from the Marriage Allowance tax advantage may be impacted by the new tax reforms.
The tax benefit applies when one partner pays 20% basic rate income tax and the other makes less than the £12,570 personal allowance and hence pays no tax. It enables the lower earner to transfer £1,260 from their own personal allowance to their civil partner or spouse.
This might result in savings of up to £252 this tax year. However, pensions advocate Ros Altmann has issued a warning that spouses who used this may face an unexpected income tax payment, says Birmingham Live.
Altman cautioned: “Many may have no idea they need to pay tax at all, especially if they have never been liable before,”
She highlighted that the number of retirees subject to taxation has doubled since 2010, from 4.5 million to more than nine million.
She warned: “Pensioners who use the marital allowance to donate part of their personal allowance to their partner would have an even lower personal allowance of £11,310.
“They are already at risk of being liable for tax without knowing. They risk being hit with fines and penalties for not paying a tiny amount of tax that they didn't even know about.”
Retirement Specialist Raises Concerns on Marriage Allowance Amid State Pension Increase
Stephen Lowe, the esteemed director of retirement specialist firm Just Group, has recently voiced significant apprehensions regarding ongoing developments in the financial landscape, especially when it comes to the implications of state pension increases.
“With the state pension increasing many will see marriage allowance benefits reduced or reversed,” he declared.
Lowe warned that “alarm bells should ring” amongst couples where the non-taxpayer's taxable income is expected to exceed the £11,310 reduced personal allowance.
He went on to say: “The whole £1,260 of personal allowance has to be transferred, so where non-taxpayer's income is above £11,310, they may be pulled into starting to pay tax without giving an equal or bigger tax-saving to their partner.
“The first some couples will know is when they see more tax is being taken or receive a letter from HMRC asking for the extra.”
