More than one million couples will be only £1.35 a week better off under David Cameron’s flagship proposal for a married couples tax allowance, according to new research.
The Resolution Foundation think tank found that two out of five couples who will pay £3.85 a week less tax from 2015, as the Conservatives announced last month, will see £2.50 of it “clawed back” when the new Universal Credit takes effect two years later.
This is because Universal Credit will be based on post-tax income, which also means the cost of the marriage tax cut to the Treasury will reduce over time.
Donald Hirsch, director of the Centre for Research in Social Policy at Loughborough University, said two thirds of the couples with children who will benefit from the new allowance would do so “only by a negligible amount – less than 20p a day.” He said: “This is an important consequence of the new arrangements which has barely been noticed.”
The Department for Work and Pensions insisted that all families entitled to both Universal Credit and the marriage tax allowance would see their income increase. It said transferable tax allowances were a progressive measure, with two-thirds of the benefits going to families in the lower half of the income distribution. It added: “Overall, more than 3m households will gain from Universal Credit by around £168 a month on average – with three-quarters of these coming from the bottom two-fifths of the income scale.”Reuse content