127,000 couples given HMRC bill bombshell and set to lose perk

A bill bombshell has been issued over a tax thresholds change hitting 100,000 couples. A freeze means 127,000 people are set to lose the benefit of Marriage Tax Allowance in a brutal Cost of Living blow for many across the country.

Sean McCann, of financial advice firm NFU Mutual, which carried out the analysis, said: “Crossing the threshold into higher rate tax once your income exceeds £50,270 can bring some unwelcome tax surprises. Exceeding the threshold by only one pound means that you lose the ability to claim the allowance.”

A decision to freeze income tax thresholds until 2028-29, means 3 million workers will be pulled into the higher rate – 40 per cent – tax bracket. As a result, close to 128,000 couples will lose the right to claim the allowance because one of them will now be classified as a higher rate taxpayer.

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Responding to the shake-up, one typed: "Most people who benift from this transfer of tax are the lower paid. As a pensioner I receive my state pension and a small private pension that put me above the personal tax limit. My wife only has her state pension and does not reach her limit so the tax allowance transfer to myself means i pay a few pound less in tax.

"On my small income this saving amounts to a lot of money for me. To High earners this amount is a insignificant amount." The marriage allowance reduces couples’ tax bills by allowing the higher-earning spouse to transfer £1,260 (10pc) of their personal allowance to their partner.

The basic-rate taxpayer will receive a tax credit equivalent to the amount transferred, saving them up to £252 per year. However, a couple can only claim it if one spouse is a basic rate taxpayer and the other earns less than the personal allowance, currently £12,570.