By Laura Perrins, Conservative Home
Marriage is back on the agenda. This hottest of political potatoes has been tossed around from vigorous supporter (Tim Loughton MP) to a lukewarm “let’s placate the masses’ David Cameron, with various groups – including Labour and the Liberal Democrats – in opposition. So why should marriage be ‘supported’ in the tax system?
The first point is that marriage is currently penalised in the tax system. If you are a mother lower down the income scale and move in with a partner, the extra income they bring into your household means you stand to lose most or all of the £3,270 you otherwise receive in child tax credits. Harry Benson of The Marriage Foundation estimates that there are at least 300,000 families that pretend they live separately, but in reality are together. Similarly, higher up the income scale, if you have children and are in receipt of child benefit you will lose it if you marry a higher rate tax payer. You can hide your relationship from the tax-man, as some do, but you cannot hide the fact you are married.
So this is the starting point – that marriage is penalised in the current tax system. The second issue is to ask: why should any person be able to transfer some of their tax-free allowance to his or her spouse? Every adult has a tax-free allowance, but in the UK – uniquely amongst large OECD countries, bar Mexico – it is on a use-it-or-lose-it basis. This proposal says that because marriage is distinctive, a non-working spouse can transfer a small sum (about £150 a year) to their spouse.
You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.