Married couples tax allowance: who will benefit?

9 October 2013

"What I can confirm is that all married couples paying basic rate tax will benefit from this move."

David Cameron, Prime Minister's Questions, 9 October 2013

"The Prime Minister said that all married couples who are basic rate taxpayers would benefit. Would he like to correct the record, because that is just not true?"

Ed Balls, Prime Minister's Questions, 9 October 2013


Plans to allow married couples to lower their combined tax burden were probably the most discussed policy announcement of the Conservative party conference.

The first Prime Minister's Questions after the return from conference season saw David Cameron talk up the move, saying all married couples paying basic rate tax would keep more of their money, a claim that was later challenged by Shadow Chancellor Ed Balls.

It's certainly the case that not all married couples paying the basic rate of income tax will benefit from the policy.

As the Treasury's own announcement from last month confirms: "The policy benefits married couples, including same sex married couples and civil partners where one is a basic rate taxpayer (earns below £42,285 in 2015 to 2016) and one has unused personal allowance." [Emphasis added].

The personal allowance for a working-age person is currently £9,440, meaning that any married couple where both partners are currently earning more than this amount won't be able to benefit, even if they are both basic rate taxpayers. According to Treasury estimates, approximately 4 million households stand to benefit, compared to the 8.9 million married couples paying the basic rate of income tax.

The IFS has also looked into who will benefit from the move and found that 1.4 million of the 7.8 million families with children may be able to benefit from the scheme, while 2.7 million of the couples likely to benefit will have at least one member in work (with the remainder largely accounted for by pensioners).

According to one lobby journalist, this misunderstanding was cleared up by the Prime Minister's aides following PMQs, however Mr Cameron didn't correct the record in the Commons, electing instead to say that "the point is that the married couples' allowance is available to every basic rate taxpayer."

The accuracy of this statement is debateable: while both members of a couple need to be basic rate taxpayers (or not paying income tax at all) to be eligible for the scheme, it doesn't necessarily mean it's "available" to every couple which meets this criterion, as only those where one half is earning less than the personal allowance threshold will be eligible to benefit in practice.

What isn't debateable however is that this response is unlikely to clarify the matter to any of those watching PMQs yesterday, and it would be better for the Prime Minister to correct the record in the ministerial corrections column in Hansard to prevent this policy from being misunderstood.

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