New tax break for married couples

In this recently filmed interview David Cameron said:

“Marriage is a great institution and it helps to build good and strong societies so I think it’s right to back marriage properly in the Income Tax system – most other advanced industrial countries do and it and we should do it too.”

So on the eve of the Conservative Party Conference at the end of September, the Prime Minister began to unveil plans for a new allowance which will benefit an estimated 4 million married couples, including 15,000 in civil partnerships. It is aimed at those who are not in the higher tax-paying rate (so those couples with a taxable income of less than £42,285 in the tax year 2015-16) – so will benefit only those on a middle or lower income.

In the new scheme, people will be permitted to transfer up to £1000 of their personal tax allowance to their spouse/civil partner, for instance if one partner has not used all of their personal allowance or does not work. This will potentially save the couple up to £200 per annum but it is only allowed where the highest earner is a basic rate taxpayer. On-line applications will be possible and any tax saving will apply to the tax year 2015-2016, the benefit being received by Summer 2016.

Meanwhile the Institute of Fiscal Studies (IFS) has said that the impact of the new tax break will be ‘small’ and rather more a ‘social message’ than a significant financial benefit. Further commentary can be viewed in the video from Sky News, above.

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