October 5, 2010 by Andy Merrett · Comments Off on Tories may introduce married couple tax allowance
Following the backlash against yesterday’s child benefit shakeup, the BBC understands that the Conservative Party may be planning to introduce a married couples tax allowance.
This is completely unofficial, no details have yet emerged, but it would certainly fall in line with what the Tories have said in the past.
That said, political parties frequently go back on what they’ve said in the past, and we are also dealing with a coalition government where compromise is the dish of the day.
We’ll be very interested to see what tax breaks may be offered to married couples, and how unmarried couples hit by the child benefit losses will react to that.
It’s over ten years since the married couples allowance was scrapped. These child benefit cuts due to be implemented in 2013, and it would seem likely that any tax breaks would come into effect at the same time.
Families paying the higher rate of tax will lose child benefits from 2013, as one of the Conservative Party cuts comes into effect. Additionally, all families will lose benefits for the third and subsequent children.
The “absolutely necessary” decision is expected to save £1bn per year, though the three year grace period means that saving won’t kick in yet.
Government statistics suggest that the 7.7m families universally receiving child benefit currently cost the economy £12bn per year. This change would affect around one-sixth of (1.2m) families.
Chancellor George Osborne said, “It’s very hard to justify taxing people on much lower incomes in order to pay the child benefit to some of the better off in our society.”
As with all cuts, this will hit some families much harder than others. One particular anomaly is that a single parent earning over £44,000 (the first tax rate boundary) would lose benefit whereas a family with two parents earning just under £44,000 would keep the benefit.
Child benefit money will be reclaimed via the tax system, though Osborne urged higher rate taxpayers to voluntarily stop claiming the benefit, suggesting it would be the “most sensible” solution.
Children’s charity Barnados said that it “bitterly regretted” the cut, but that if it was necessary then it should be assessed on the basis of income.
The Child Poverty Action Group said it was unfair that families were yet again paying the price for a debt crisis not of their making.
Will these changes affect your family? Leave your comments below.
With the country still tentatively coming out of recession, it’s been difficult getting exact budgetary figures from any of the major political parties.
We know that the Conservative Party has been talking about family values for a long time now, but now that the General Election is looming, its plans to introduce taxes that benefit married couples are being scrutinised.
The Financial Times reports that the party has refused to comment on its speculation that £1bn would be ploughed into benefiting married couples.
Speculators believe that the Tory party could scale back the plan to give all married couples a single transferable tax allowance, instead opting for something that benefits newlyweds or those parents with under-3s.
Unfortunately, it seems likely that we won’t get any specific answers from any party until after the election, and even if we do, things often change once they get into power.