Individualistic tax system is crippling UK one-earner families

CARE’s latest tax report shows that decisions made to increase the personal tax allowance has led to a disturbing individualism at the heart of the UK’s tax system, making marriage fiscally unattractive.

The report, ‘The Taxation of Families – International Comparisons 2017’, reveals that the tax burden faced by one-earner married couples with two children on the average wage is a staggering 30 per cent higher in Britain than the rest of the OECD. Meanwhile, the tax burden on a single parent with two children is 26 per cent greater than the OECD average.

But when you look at the tax burden on a single person without family responsibilities it is significantly less than the international averages – eight per cent less than OECD average and 18 per cent less than the average for the EU (22).

One-earner married couples with two children on the 75 per cent average wage face the highest effective marginal tax rate in the developing world – a crippling 73 per cent. By contrast the UK income tax burden on a single person without children is 13 per cent less than the OECD average at the OECD average wage.

The latest figures from The Office of National Statistics (ONS) show that stay-at-home spouses contribute thousands of pounds a year to the economy. But their worth is omitted from the tax system, with the marriage tax allowance sitting at a pitiful 10 per cent.

If the Government introduced a fully transferable tax allowance for a smaller group of one-earner married couples, such as those with the children under five, this would go a long way to improve support for struggling families across the UK.

This could also incentive’s cohabiting couples to marry, which would also benefit the Government as family breakdown has costed the Government over £50 billion. Cohabiting parents make up 19 per cent of all couples with dependent children, but account for half of all family breakdown.

CARE’s Chief Executive Nola Leach said:


“The way that the UK tax system treats two people on the same wage, but one who has family responsibly is absurd. It penalises families and generously rewards single people who have no family responsibly.

In allowing successive increases in the personal allowance whilst neglecting the marriage tax allowance, the Government has in turn made marriage fiscally unattractive.

Sadly in his latest Budget, the Chancellor failed to address the discriminatory nature of the tax system and instead chose to increase the personal allowance.

These increases mainly benefit single people and couples without children, households which are frequently in the top half of the income distribution.

Countless studies have illustrated the benefits of marriage, especially on child stability. But with UK tax system rigged in favour of the individual, it does not promote marriage to be a viable choice.

The UK is completely out of step with other OECD countries, who do recognise the importance of marriage in their tax system.

The Government must urgently review its treatment of one-earner families. If the Government is serious about helping struggling families then it must act to reduce their tax burden.

The simplest way to do this would be to introduce a fully-transferable tax allowance to married couples with children under five.

This would go a long way to improving support for struggling families across the UK.”



Rachael Adams 

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