HMRC targets almost two million married couples in tax crackdown

Around two million wedded couples and civil partners who claim Marriage Allowance as a tax benefit could find themselves targeted by HMRC, it is reported.

The Government department is said to be targeting pensioner couples in a new tax raid who may not even know they are in the wrong. It concerns a tax perk which applies where one partner pays basic rate income tax at 20%, while the other earns less than the £12,570 personal allowance and therefore pays no tax.

It allows the lower earner to transfer £1,260 of their personal allowance to their spouse or civil partner, reports BirminghamLive. This can save up to £252 this tax year, with around 1.8million couples gaining from the tax boost.

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But pensions campaigner Ros Altmann has warned that couples who have taken advantage of this could face an unexpected income tax bill as a result. She said: “Many may have no idea they need to pay tax at all, especially if they have never been liable before."

She said the number of pensioners liable for tax has doubled since 2010, from 4.5m to more than nine million. She warned: “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.

"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."

Around two million people could be targeted, according to Birmingham.

Stephen Lowe, director at retirement specialist Just Group, has also raised the alert, saying: “With the state pension increasing many will see marriage allowance benefits reduced or reversed."

He 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. And he added: "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.”