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?

I understand your grievance with the perceived unfairness in that but ultimately Tax (in all its forms) is a legal imperative not a moral one so I honestly cannot see how any government could make all things fair to all people. After all there are plenty of single parents that can’t get CMS, even though they legally should, out of an absent parent let alone an inheritance. Also just a read of this thread shows that no matter what the system someone will see it as unfair. “You’re single but on GBP50k? Well we’re married on GBP30k. You don’t pay child care but I have to, I don’t get CB but you do etc - sure you get the picture . Maybe nobody should pay IHT?

MyDcAreMarvel, I don’t think for one minute that I should pay less tax than you.

In fact both my family and your family are in the same boat in terms of income tax. One high earner. So we pay more income tax per household than two middle earners and their child would pay.

But all three of these families could have the same heating bill, same council tax, same car insurance, same car tax, same electric bill, same telephone bill, same water bill (if un-metered). Our food bills will be different.

But the benefits system is highly favourable to single parents

Ermmm....is the the fictitious ‘single parent benefit’?

Bugger your fil hadn't sent that money, and it is highly unlikely that the house hadn't at least doubled in value since his father bought it. Vast amounts of unearned wealth in the capital gain, as well as the fact that that your fil hadn't sent a penny of the value of the house.

• earnt not sent

Life isn't fair. Whining about paying tax on something you haven't earnt is very "poor little rich guy".

If people think inheritance tax is unfair - I don't since the estate has to be worth more than half a million to incur it - the answer is simple. Just spend your money so you leave an amount that's under the threshold. I have zero sympathy for people inheriting a vast amount of money without lifting a finger and whinging about paying tax on some of it.

Child tax credits calculated on household income. Child benefit should work on the same basis.

Judas, I totally get the picture. 100%. It’s been an informative afternoon though, especially wrt the higher/lower tax earners or higher earner/SAHP being in the same position as a single parent.

You definitely can’t please everyone.

Also, who ON EARTH thinks that this method of calculating child benefit is appropriate. It is utterly ridiculous that two parents esrningn49k each get child benefit, but one parent esrning 50k doesn’t is ludicrous.

It's a bit like being given carers Allowance from 1 department and then having some of it taken away by 2 departments which once combined amounts to more than the CA itself.
The whole system just doesn't work for EVERYBODY but it does work for the majority.
x

If you were sharing your household you could achieve the same effect.

Inheritance tax is wrong because for me, having paid tax already on everything I've earned and accumulated, I should be free to give it away however I see fit.

The unfairness in the system is 2 parents get taxed individuality but benefits are given on dual income or in the case of child benefit the higher earner. That is unfair as previously pointed out. It's crazy that 2 families with same gross income one pays way more tax than the other and the other gets a benefit.

Noting that the Ops Child is no longer a child but is an adult earning you are in no different position to any other unmarried person.

But the benefits system is highly favourable to single parents
This
For years DH was working and I wasn't (no DC). I didn't get any benefits because of his salary, but he was paying as much tax as a single person. We actually figured out that we would gain quite a lot from divorcing, as I would then be entitled to some benefits!
(we didn't though)

You can say exactly the same thing about everything you spend, it's not just inheritance tax. You pay income tax, then you spend what's left and pay VAT/fuel tax/council tax. The same money is taxed over and over again all the time.

Half a million tax free should be enough for anyone and if it's not they're just plain greedy.

YANBU and the tax system also is against married couples that stay married until they both die.

If say, Paul and Susan marry but then Paul dies, a few years later Susan remarries Peter who also dies - Susan would have IHT Nil Rate Bands of her own, Paul and Peter - so a combined Nil Rate Band of £975!! That's without considering the Residence Nil Rate Band if she leaves her main residence to her children and their descendants.

Yes. Married people may seem to have a better deal when it comes to inheritance tax, but there are also some couples who are not married who do not benefit from the transferable Nil Rate Band. There are also some people who will do all that they can to avoid paying IHT by setting up trusts, and others that are happy to allocate property/investments to "pay the IHT" when they die.

Some people end up in a nursing home and their house is sold to pay for their care fees and £600-£1,000+ a week soon gets through the proceeds of sale! While others who never own a property are in the same nursing home paid for by the local authority.

£975K*

ginghamstyle you can only ever use up to the value of 2x nil rate bands. If you were married twice and your first spouse used their NRB by writing a will leaving their estate to their children, then you could use your second spouse's NRB. Or you could use half of spouse 1's NRB and half of spouse 2's NRB and they could each use the other half themselves via trusts/wills/gifting/whatever. But you cannot personally use more than £650k of NRB. Not counting the additinal residence NRB.

Alonsos you haven't paid tax on the capital gain which is any increase in the value of your property since buying it. Perhaps a higher rate of capital gains tax just on the unearned wealth would be "fairer"?

For most valuable things you buy, there's tax to pay when you sell.

However as Bluelady says all income is taxed again when you spend it. 20% VAT on most things.

Inheritance tax is unfairly full of loop holes compared to taxes on most other things. The tax on the capital gain on million pound homes bought 40+ years earlier for a fraction of that should be paid at the very least.

Yep. Life is unfair. Suck it up! 😜

It’s just more expensive as one person than two.

What does PISS ME OFF (sorry) is that it’s more expensive to have things like national trust membership et al.

For years DH was working and I wasn't (no DC). I didn't get any benefits because of his salary, but he was paying as much tax as a single person. We actually figured out that we would gain quite a lot from divorcing, as I would then be entitled to some benefits!

In what way has this anything to do with single parents and the tax/benefit systems if you're not actually a parent?

Married couples used to be taxed jointly, up until the late 1980s I think (certainly, since I've been working). They could opt for separate taxation of their earned income, but even then the wife's investment income (and possibly some other things) was taxed as though it were the husband's (and had to be declared to the husband).

This was obviously unreasonable and sexist, and was quite properly altered to a system in which people were taxed as individuals. In the process the married man's allowance was abolished, along with howls from the right about "penalising marriage" and so on.

And here we are. Do you want a return to joint taxation, in which spouses have to declare their income to each other and be taxed as one entity? I would hope the answer to that is "no". So yes, the situation now is that a couple have two personal allowances, and a single person has one. And there is a similar "unfairness" if you want to see it like that if you compare a couple with one person working versus two, and similarly for their pensions.

Do you want a return of the married person's allowance, at scale (not the political sop Cameron pushed through?) Unfair to cohabiters, surely? A child tax allowance? Unfair to the childless, surely?

A single, indivisible personal allowance is probably the least worst, least anomalous solution.

@ohreallyohreallyoh
Ok so same situation but one DC: the married couple doesn't get benefits. They would if they divorced.