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UK Politics

No tax cuts until end of decade says Prime Minister with married couples set to benefit further

Prime Minister said austerity measures will remain in place past 2018 but would like to “extend” tax breaks for married couples when possible

The Prime Minister has ruled out tax cuts for the rest of the decade, with austerity measures set to remain firmly in place.

Speaking during his visit to China David Cameron suggested that when any tax breaks are handed to middle income households, married couples will be one of the first groups to benefit.

Stressing his support for Chancellor George Osborne's plan to run the state budget at a surplus once the deficit has been eliminated, Mr Cameron said: “We've cut the deficit by a third but it's still much too big, it still needs to come down further.”

“As the Chancellor said in his party conference speech, we want to get to a position where Britain is back in the black, we want to fix the roof when the sun is shining.

“We think that when you have - as we hope to have - some years of economic growth, you should be putting money aside for a rainy day.”

Chancellor George Osborne is expected to use Thursday's Autumn Statement to announce details of a transferable tax allowance worth £200 a year to an estimated four million couples from 2015.

The scheme will cost an estimated £700 million, but will not be available to the poorest households.

Mr Cameron has now said the move is “the start of something” he plans to extend even further.

“We will be making this change to back marriage in the tax system. It's a change I strongly support. It's very similar to what we set out in our manifesto. It's something I have long wanted to do so I am pleased we will be achieving it.

“I believe in marriage, I believe marriage should be recognised in the tax system. I see this as, yes, a start of something I would like to extend further.”

The allowance will be available for married couples and civil partners in 2015, if neither spouse earns more than the higher rate tax threshold of about £42,000 and one earns less than the personal allowance level, which will be around £10,000.

The higher earner will be able to transfer £1000 of their personal allowance to the lower or non earner, meaning they will pay income tax on £1000 less of their earnings.

The proposal has come under fire because it will not be available to the lowest income households, which have no allowances to transfer, and appears to favour the traditional family with a working father and a stay-at-home mother.

Julianne Marriott, of the Don't Judge My Family campaign, said: “The Government is already planning to spend £700 million promoting a fantasy 1950s family with marriage tax breaks that will only go to one third of married couples and just one in five families with children, despite there being absolutely no evidence they will encourage people to marry or stay married.

“The idea that even more money will be spent on what the Prime Minister himself has called a 'signal' is outrageous. The Government should be spending any spare cash it has on helping, not judging families.”

Speaking to reporters, Mr Cameron added  the Government had already helped middle income families by legislating to raise the personal threshold below which no income tax is paid to £10,000.

“Lifting the income tax threshold benefits all but the richest because it does benefit people on middle and even higher levels of pay,” said the Prime Minister.

“By next April it will be worth around £705 to the typical taxpayer so I think it's been a very good way of trying to help families with their finances at a difficult time but recognising that there should be a benefit as we keep the costs of Government down and pay down the deficit.”