Does the UK tax system seriously discriminate against single parents?

[Porcelaincup]

Single parent of an adult child.

I am fortunate that, in the last year, my annual salary has risen to 50k. Personal allowance of £11,850, therefore I hit the 40pc threshold. Yet, if I was married and each of us earned 25k, we would have double the combined personal allowance and not hit the 40pc threshold. My mortgage and most household bills would be the same whether I was married or single.

Inheritance tax rules mean that when I die I can use the extra residence nil-rate band to leave a property up to 500k to my child exempt from inheritance tax. But if I was married, I could leave a property worth up to a million.

So. I pay more tax on my income than two married people with the identical total income. And then when I die, my child has pay more inheritance tax on my property.

AIBU to think this is discriminating against single parents?

The tax system does not discriminate against single parents.

Each person should be taxed as a single entity. Which they are.

Obviously it is cheaper to be part of a couple, because you can share child care, share a bedroom, share bills. That isn't the governments problem to sort out.

You're right, OP. It has been deliberate government policy for a long time, to encourage marriage and discourage those of us who live in 'Broken Homes' . As if anyone every stayed in an awful marriage just for the tax benefits.

Take child benefits, for example. If I earn over £50k, I lose child benefit. But if I have a husband and we both earn £49k each, we get full entitlement to child benefit.

You’re taxed as an individual. Being married is irrelevant- if one of you avoided paying tax only that person who be prosecuted, not the couple just because they’re married!

No.

HolidayHelp, but isn’t there extra married persons allowance on top of the personal allowance?

There is no automatic marriage allowance but if you don’t use your personal allowance you can ask to have it transferred to your spouse - depending on their earnings

FluffyWuffy, if we are all taxed as a single entity, rather than on income into the family, what about the extra inheritance tax benefit from being married?

And, what about the child benefit issue that Roomba mentioned?

You can ask to have a small proportion of your personal allowance transferred to your spouse if you own earn the threshold. It doesn’t amount to much and it is only for couples where one partner earns less than the personal allowance.

Inheritance tax relates to assets rather than earnings. Marital assets will often be jointly owned. The two issues (income tax and inheritance tax) are entirely unrelated.

Have to be honest, while I can sort of see what you are all saying about being taxed as an individual...knowing that two parents with my same income will pay far less tax than me just seems unfair.

calico, I totally agree they are two unrelated tax considerations. I just feel that as a single parent, you lose out on both of them.

You are taxed on £50k the exact same amount as a single person as you would be if you were married.

If you only earned £25K as a single person, you would be taxed the exact same amount as a married person earning £25k would be taxed.

You cannot expect to earn £50k and be taxed as if you earn £25k, whatever your marital status.

Yes definitely on the child benefit issue. As a higher rate tax payer who has moved to 60k, my effective taxation is about 75% on the jump between 50 - 60k.

I don't understand why two people can earn 49k each and keep it but one at 60k can't. Why didn't they make it households with income over 100k?

I used entitled to - dropped my salary to part time. I'd be better off, it's crazy.

Once I've paid the mortgage and childcare we're technically under the poverty income rate.

But we've a roof over our heads and are happy - and others worse off. But it's a strange taxation issue.

But one married parent earning the same could be supporting 3 kids and a stay at home parent. So they would be worse off as they’re supporting another adult as well. Should they be taxed less? Clearly no because that’s ridiculous. Income tax is based on your earnings, that’s it.

But people without children never receive child benefit.

And to push the argument further, people who develop serious illnesses at a young age receive thousands of pounds worth of healthcare probably well above what they have ever contributed to the state. It’s not all a question of absolute fairness. It’s about having a workable system that tries to do as best it can.

How else could it work?

If you tax a married couple it's discriminatory to those who are married vs cohabiting. If you tax co-habitors to keep it fair we'd all be being paying even more tax by the time hmrc admin-ed that nightmare!

Carrying on this discussion, what is the ideal take home salary for single person in light of eligability to benefits and taxation, as opposed to a similar salary if you were married and taxed, etc also entitlement to benefit, tax credit top ups etc. Just wondering as there must be a sweet spot amongst a low salary versus a high taxed salary?

I don’t think that married parents should be taxed more.

Nor do I have a solution.

I also understand fully that income tax is simply about earnings.

But, from a practical household perspective, irrespective of your views on income tax, surely we can agree that a single parent, higher earner pays more income tax than married rate lower earners.

If that is how income tax has to be, then so be it. But it does make it financially harder on a single parent.

Are you for real OP?

You're taxed as a single person

Mrsm43 ‘You cannot expect to earn £50k and be taxed as if you earn £25k, whatever your marital status.’

I don’t at all. But from my perspective, a married couple do exactly that. They earn 50k (let’s say it is split equally) but are taxed as if they earn 25k.

Tax is paid single. Benefits are usually calculated as household income.

I really don’t see your argument. Someone earning 50k is taxed as if they’re earning 50k. Married or single. Yes bills are less but that’s if you share a house. If you want to get a housemate or lodger your bills would be less.

Yes. I am sadly for real.

I don’t at all. But from my perspective, a married couple do exactly that. They earn 50k (let’s say it is split equally) but are taxed as if they earn 25k.

Eh? If each person earns 25k they are each taxed as if they earn 25k.

Ok. I guess you all win on the income tax. I see what you are saying - that everyone is taxed on the individual income. And, unfortunately this does have an impact on a single parent family.

So what about the inheritance tax thing then?