About the Marriage Tax Breaks Policy

Why a “marriage tax allowance”?

Before the general election, in 2010, the Conservative party said they wanted to “send a signal that we understand the value of commitment“. They said, in their manifesto, that they would do this by  “recognising marriage in the tax system”.

We want to send a signal right back: don’t judge my family.

We believe that great families come in all shapes and sizes. And we do not believe that the Government has the right to tell us which kind of relationship is best.

How will it work?

A marriage (or civil partnership) would only be “recognised” if one of the couple doesn’t pay income tax (earning less than £9,440) and the other is a basic rate tax payer (earning between £9,440 and £41,451). The person earning less transfers their tax allowance to the one earning more. The transferable allowance is £1,000 and it’s worth about £200 a year.

So do all married couples will get it?

No. Less than a third of married couples will get the marriage tax allowance. It will only go to those couples that are married and where one spouse is a the “breadwinner” and the other the “homemaker”.

Do all married couples with children get it? 

No. Fewer than one in five families with children will get it. The marriage tax allowance will go just 1.4 million of the 7.8 million families with children (fewer than one in five). Single, widowed, cohabiting parents won’t get the allowance or and working parents.

What does it cost?

It’ll cost around £700m. That’s more than the cuts to SureStart, the cuts to educational maintenance allowance (EMA) or the so called bedroom tax.

In this fiscal climate when the government is cutting services like SureStart and child benefit, we think there are many better ways of spending £700m pounds that would help families and relationships. We’d like to hear what you would spend the money on. Get in touch!

Will it help the families who really need it the most?

No. Many of our poorest families won’t benefit. The IFS finds that most recipients of marriage tax breaks would be in the middle or lower-middle of the income distribution. For example a family with two parents both working to make ends meet won’t benefit, even if they were both being paid the minimum wage (because they would both be basic rate taxpayers). And those where neither parent is able to work are excluded as well as the 1 in 4 children who grow up in a single parent family.

But this hasn’t stopped 15 Conservative MPs claiming that the marriage tax allowance is a “vital weapon in combating child poverty”.

Will it help kids get the best start in life?

No. It won’t help the 1 in 4 children growing up in a single parent family. And actually, the policy is so badly targeted that many of the couples who do benefit will be older with grown up children.

Will it help the most vulnerable?

No. It won’t help the victims of the 12.9 million incidents of domestic violence each year to take the difficult decision to leave and build a better life for themselves. It won’t help widows or widowers who have lost loved ones. And it won’t help the lowest earners.

Doesn’t every other country recognise marriage in the tax system?

No. New Zealand, Sweden, Finland, Greece, Hungary are all countries that don’t recognise marriage in the tax system.  Dr Patrick Nolan from the think tank Reform said: ”Since the 1970s the clear direction of travel in tax systems has been to move away from family taxation.”

Will it make more people get married?

Even if you believe that it is right for the Government to encourage a lifestyle through the tax system – it doesn’t seem very likely that £3.85 per week simply is enough to bribe people to get married or stay married. Just ask anyone who has been divorced. As well as asking people with direct experience we also asked an independent think tank:

“The incentives to marry – or not to divorce – provided by a policy whose maximum benefit is [£150] a year must surely be weak relative to the other costs and benefits involved,” the Institute for Fiscal Studies said.

And is marriage actually best?

The Institute of Fiscal Studies agrees that children born to married couples do better in both cognitive and social outcomes than those born to cohabiting parents. However this is explained by the fact that cohabiting couples often have lower educational qualifications and lower income than married couples. The research shows that these factors explain of why those children have lower outcomes. There doesn’t seem to be any evidence that getting people who are cohabiting down the aisle would increase their qualifications or income and therefore their children’s outcomes.