HMRC targeting 'two million' married couples in new tax raid

HMRC is reportedly targeting 'two million' married couples in a new tax raid, with many unaware of the situation, according to tax experts. The two million couples and civil partners who claim Marriage Allowance as a tax benefit could find themselves under scrutiny by HMRC.

The tax benefit applies when one partner pays basic rate income tax at 20 per cent, while the other earns less than the £12,570 personal allowance and therefore pays no tax. This allows the lower earner to transfer £1,260 of their personal allowance to their spouse or civil partner.

This can save up to £252 this tax year. However, pensions campaigner Ros Altmann has issued a warning that couples who have taken advantage of this could be hit with an unexpected income tax bill. "Many may have no idea they need to pay tax at all, especially if they have never been liable before," she stated.

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Altmann highlighted that the number of pensioners liable for tax has doubled since 2010, from 4.5 million to over nine million. She cautioned: "Pensioners who use the marriage allowance to give part of their personal allowance to their partner will have an even lower personal allowance of just £11,310.", reports Birmingham Live. "They are already at risk of being liable for tax without knowing."

She further added: "They risk being hit with fines and penalties for not paying a tiny amount of tax that they didn't even know about."

Stephen Lowe, director at retirement specialist Just Group, has also voiced his concerns. "With the state pension increasing many will see marriage allowance benefits reduced or reversed," he said. Lowe said "alarm bells should ring" among couples where the non-taxpayer's taxable income is likely to be above the £11,310 reduced personal allowance.

"He went on: "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. "He added: "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."