Tax and Marriage
Bad news for married couples, no Tax Break in 2013 budget
Despite numerous campaigns and significant government support for revisiting married couples tax allowances (predominantly focused on a fusion of personal allowances ) the government has pulled away and confirmed that they will not be altering the tax allowance structure for married couples.
The plans included discussion of merging personal tax allowances. The thought process being that families are effectively taxed as a household but personal allowances are allotted on a personal basis. In families where one partner works and the other stays at home, this can mean a significant difference in take home pay and family spending power.
Example PAYE Salary comparison between families with one working Vs two
The plans to fuse the separate personal allowances into a central married or partner allowance / allocate part/all of your personal allowance to your partner would have a very positive impact on families across the UK and the wider economy. The marriage allowance would effectively inject additional cash into middle and lower earning married couples across the UK with the additional take home salary easing the pressures on families and injecting additional cash flow into local economies. iCalculator is a firm supported of the married couples allowance, the easing of family pressure is important but the positive impacts on the economy are the biggest win on this tax initiative.
Extra family income means greater spending power, the small jobs around the house become affordable, the essentials and luxuries become more viable, families start to take short breaks, the bottom line is that cash starts to flow.
In recent years, the double dip recession, austerity measures including increasing tax burdens, fuel and food price increases coupled with a shrinking economy have put huge financial pressures on working families. The has resulted in a number of scenarios including both couples working (meaning reduced supervision / duty of care to their children, a contributor to broken Britain?), families separating to take advantage of a tax system that favours single parents, struggling families where only one partner can find work (with the benefit / tax allowance system making work less financially fruitful that staying on benefits).
So, a disappointing announcement that will no doubt be bad news for a lot of families in the UK, particularly those who encourage and try to support married couples.
Why has the government cancelled the married couples Tax Break in 2013?
Sadly, the u-turn is about personal fears, prejudice and politics rather than the actual finical standing of married couples. The recent decisions around the legalisation of same sex marriage has caused a rift within the conservative party with current reports indicating up to a 100 conservative members have left the party due to their personal feelings / opinion over same sex marriage. The topic is controversial and bridges religious, personal and political feelings. The reality is, regardless of your opinion, that we are living in the 21st century and change will come regardless of a minorities fears.
A less subjective individual may wonder whether these fears are well founded or a timely excuse to avoid introducing a measure that will see less personal earning going into the treasury and more into the pockets of those who need it. Whatever the real political reason, it is sad news for British families and the British economy as a whole.
How will this effect your spending power this year? Use our 2013/14 Salary Calculator to see how your household budget will hold up this year.
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