Married couples allowance to be re-introduced

David Cameron has recently announced that there will be a new married couples allowance from April 2015. This is not the first time that there has been a married couples allowance, the previous one having been phased out in the late 1990’s following the introduction of separate taxation of husband and wife (although a form of married allowance still remains for married couples where one spouse was born before 1935).

The new allowance will work by allowing a married person to transfer up to £1,000 of their existing personal tax allowance to their spouse. This will only be possible, however, where neither spouse is a higher rate tax payer. Clearly therefore, it will only create a tax benefit if one spouse does not have sufficient income to use up the full amount of their personal allowance. If this is the case then they will be able to transfer the unused portion of the allowance (up to £1,000) to their spouse.

David Cameron later tweeted that the tax benefit will also be available to civil partnerships.

On review, it appears that the introduction of the married couples allowance will not have a significant financial impact. It is reported that it will only apply to around 25% of the UK’s married couples and the maximum annual savings will only be £200. It seems most likely therefore that it is more of a political statement, reinforcing Tory views on marriage and family values.

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