The tax-free Personal Allowance threshold is currently frozen at £12,570.
Some women over State Pension age who have shared part of their income tax allowance with their spouse could face unexpected tax bills as a result of the frozen Personal Allowance threshold, a former pensions minister has warned. The marriage allowance applies in cases where one person in a couple pays basic rate tax and the other is a non-taxpayer.
In many cases, the husband will be the taxpayer and the wife will have the lower income and be a non-taxpayer. The non-taxpayer can then transfer 10 per cent of their Personal Allowance to their spouse. Sir Steve warned big cash increases in the value of the State Pension, coupled with a freezing of the tax threshold, could push more women who do not currently pay tax over the 90 per cent threshold.Top Money Stories Today Sir Steve, who is now partner at consultants LCP , said: "This is yet another unwelcome by-product of the year-on-year freeze in the value of the tax allowance.
"We could see marriage allowance 'mayhem' as hundreds of thousands of couples have to decide whether to carry on with this arrangement or cancel it, to avoid low income pensioners being dragged into the tax net. The sooner the freeze on tax allowances comes to an end, the better."Basic State Pension payment rates 2024/25 These payments will rise by 8.5%:
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