Time to end the marriage tax penalty

Nov 23, 2022

The Government needs to stop penalising marriage and start ensuring it is rewarded in the tax system, a leading think tank has said.

In a new report entitled ‘Reform the Marriage Allowance’, think tank Civitas points to the shameful fact that the UK has one of the lowest marriage rates in Europe. And it continues to decline: in 2019 the annual rate of new marriages was less than a quarter of its level in 1972, and is set to go lower still.

Marriage is particularly crucial for children, the report says. Unmarried parents are three times more likely to break up before their first child’s fifth birthday.

The Government “cannot afford to be neutral about marriage”, the report says, as family breakdown is known to lead later on to numerous social and mental health problems for children. Yet in recent years the Government appears to have become squeamish about marriage, with references to it having “almost disappeared from government policy documents”.

An improved marriage allowance is needed to address the ‘couples penalty’ in the tax and benefit system. In 2010 this penalty was to the tune of £45 per week for an average family, and has scarcely improved since. The current policy, introduced in 2015, allows one spouse to transfer just 10% of their tax-free personal allowance to the other – currently worth a maximum of only £252 a year. This should be 100%, the report says.

The underlying problem is that the UK tax system is based on individuals, not households or families. This needs to change. At present, a one-earner UK married couple with two children on an average wage pays twice as much income tax as a similar family in the United States and eleven times as much as a German family.

At C4M, we welcome this report and its call for marriage to be properly recognised and not penalised.

We would not necessarily agree with all of its proposals, such as restricting the allowance only to those with young children. At C4M we believe marriage should be recognised and encouraged at every stage of life, as it is good for all of us and society as a whole. It’s high time that UK governments committed to putting marriage back at the centre of family and social policy, where it belongs.