To think married couples should be taxed together

[OneAmberFinch]

Philosophically, I think it's a couple's business how they divide their responsibilities between earning and working in the home, and the tax system should treat them as a single unit.

I would extend this to tax on investment products as well: currently, virtually every serious product (available to the masses i.e. not custom family trusts etc) is in a single person's name. For example, there are barely any joint savings accounts that pay a decent interest rate, pensions/ISAa are in individual names etc.

If there were a simple way to tax jointly, I think more of these products would exist.

Why do I care about this? Because I think it would solve quite a lot of the issues that come up on MN w.r.t. money in relationships - "you can't take a 3-year maternity leave, or if you do you need to beg your DH to donate to your pension".

I don't think it's enough to just be able to inherit someone else's pension/savings - beneficiaries can be changed. I think throughout life, many couples would like to truly manage their finances jointly, but the tax system and types of financial accounts available don't make it possible.

And the tax rate in Ireland is famously high.

Obviously you are treated as a couple for benefits. Benefits are about the minimum you need. Tax is about how much you earn and can vary.
It definitely won’t be coming here. The government would loose far too much money from people who would decide to be a SAHP and get their OH to have their tax allowance, while giving nothing to the economy.

Absolutely same. We are both high earners and own a home but I would not have got married if I couldn’t have kept my financial independence. This would start a massive hole where suddenly my income would come into the calculation of his child maintenance payments etc etc. it would never stop. I already don’t get child benefit, I don’t want to have to merge my finances so some SAHM can feel more financially secure!! If you decide to stay home then it’s your responsibility to sort it all out. I would hate for single people to be worse off, a system entirely unfair!

Far fewer people would get married if you did this, as the household would end up paying more tax so economically it doesn't make immediate sense, particularly considering that people tend to marry just before an expensive time of life with childcare costs and the need to house a family. Which would negatively impact women. First, if the relationship breaks down, as overall women benefit more on a divorce than on a break up of an unmarried relationship. Secondly, if the partner dies as spouses have greater protection on death.

Should we not reflect on that? If many women would choose to stay at home with their children except for the fact that the tax system discourages it, isn't that an issue with the tax system?

I disagree that SAHPs don't contribute, by the way - although I'm not one myself.

I understand what @DeskJotter is saying. Very few living costs suddenly halve once you are on your own. In fact, some of the costliest things remain the same, especially heating and energy, and many costs and prices increase proportionally compared to a couple.

There's plenty of evidence and data online to demonstrate the economic and financial impact of being on your own. Then there's the 'single person' tax on concessionary spending, too - holidays, most travel, not to mention the promotions/offers that are only for two.

Politically, there's not much that can be done, sadly. It would take a brave politician to cut through 'couple entitlement' and 'hard working family' rhetoric that discriminates against singles - plus, with Rachel Reeves sneaking her hand into people's purses, we are a soft target.

I think household income calculations of tax not limited to marriage would be more likely than anything based on marriage - gives want to move to household income to tax more effectively (more) but it would be based on who you live with, not who you’re married to - the reason the marriage tax allowance is so small is tories feared to do more given so many cohabiting but not married these days.

As an older woman who was a SAHP for some years, I never thought I was entitled to transfer my tax free allowance to my husband. I was not contributing directly to the economy, which this country needs. I don’t buy this rubbish that SAHP are contributing to the economy through looking after their children. My grandchildren have a mixture of care : Nursery, School, holiday and after school clubs, Us and their other Grandparents. They are certainly no worse off for not being brought up by a SAHP. The economy is benefiting from both their parents working.

If SAHP is doing work that otherwise would be paid for by fees + funding, it's a clear financial contribution ignoring any softer benefits. (Likewise for grandparental care, fwiw. I'm a parent of a preschool aged child and acutely aware of how much I'd save if I had some nearby!)

Regarding entitlement, the tax system is something entirely made up and constructed by us. You weren't entitled to transfer your allowance under the system at the time, you would be entitled to do it under mine.

Not true, because she would be earning money and paying tax to cover this.

😱 But some of us have careers. WTAF.

Married couples in the US can choose to file separately or jointly.

I should probably say I think it should be only available to married couples or some variant of "registered" couples, not all cohabitees, and I'm okay with that.

I think the PAYE point from @SoonTheDaffodilsWillBeOver is a good one, but it's not technically unsolvable. Since it would only be registered couples HMRC could keep a record of estimated earnings of the couple from the previous month, and use the same adjustment system they use today when people change their individual salaries for various reasons.

I support the principle of independent taxation and I don't agree that it should be an option to transfer the allowance. Introducing this would potentially put pressure on some women to give up their careers so that their husbands could benefit from their tax allowances. There is no guarantee that the women would have access to all of the household income in that scenario. Very appealing for controlling men who are financially abusive.

You have a lot of faith in Hmrc. I deal with them on a regular basis - there are many, many ways this would be screwed up.

they screw up simple things all the time

I would be against this. It would hurt women more than help them.

for example my ex was a high earner and I was a low earner. So financially we would have been better off him having my tax free allowance as he was paying higher rate tax on some of his income while I was on normal rate tax. I could have paid tax on my whole income and still paid normal rate -so would have made sense he get my tax fee allowance and jointly we would have been better off.

except a big reason we split was because I didn’t have access to ‘his’ money while his high earning meant I lost child benefits and couldn’t get help with childcare. He wasn’t exactly abusive and would not have forced me to give him my tax free allowance had that been possible but I suspect such a scheme would be utilised by financially abusive men in droves

So currently we have a system where benefits are based on joint income and there is a clear and obvious incentive to "live apart" and definitely not do anything so legal as get married.

But there is no corresponding financial incentive TO get married.

I think some people see my suggestion as a sort of weird distortion of the true principle of independent taxation / feminist values, but don't see that it's just a parallel to the existing system with benefits.

Considering household income for benefits purposes is just common sense. It would be ridiculous for the taxpayer to fund benefits for someone who was living with a high earner (unless they were disability benefits that aren't means tested).

It's very different from introducing taxation based on household income, which would trap many women at home and make it very difficult for some to retain their independence. It is a feminist issue as far as I'm concerned.

@MrsBennetsPoorNerves could you explain why it’s different?

In France, taxes are calculated as a family. There is no my taxes, his taxes. Everything is pooled, just like it is if you’re getting divorced btw.
And it’s the family who pays the taxes, not the individual as such.

It works well and has never stopped women from being independent. It doesn’t trap them at home either.

Im really interested why it’s so different fir you.

Not for me personally...in fact, it would be more likely to trap my husband at home because he is the lower earner. Not that I would make him do that, but it would be easy enough for a financially abusive higher earner to put a lower earning spouse under pressure.

If allowances were transferable, it would be much more tax efficient for DH to quit work and for me to take his tax allowance because I pay tax at a higher rate than he does. Our dc is older now so not an issue for us, but if you then factored childcare etc into the mix for couples with younger kids, it would be a no brainer for the lower earner to quit work in many cases. Whether they wanted to or not. And typically that would negatively impact on women.

Also, think about the example of a SAHM who wanted to go back to work. Her DH would be facing a substantial pay cut to facilitate this, especially if he was a higher rate tax payer. Can you really not envisage situations in which the woman in that situation might be pressured to stay at home even if she didn't want to?

"Alternatively - you just immediately have access to your joint ISA and pension because, well, you are one of the 2 joint owners of them?"

you've conflated a lot of weird points here

You don't pay tax on an ISA

Are you suggesting that married couples should only be allowed joint ISAs and pensions?

That doesn't strike me as fair. And if you're looking out for women, women in particular have had to fight for the right to access their own money. So of course married women are going to want their own ISA and their own pension.

You mentioned the lack of availability of things like joint ISAs. Surely that's because people don't want them?

@OneAmberFinch But there is no corresponding financial incentive TO get married.

Why should there be?

Look, I do understand the financial points you make and the unfairness you perceive - but you are not making a good moral or political argument for financially discriminating against single people.

Marriage is not the default, it's not expected (in the UK), it is a choice - and a choice that often leaves people who are married with higher financial and social rewards whether they deserve them or not.

We have this in the US where I live and it be very putative if there is a lower earning spouse as based on total income so the lower earner is effectively paying a far higher rate tax. It is known as the marriage penalty for a reason, we got a hefty tax bill the year we got married for the months in the tax year prior to our wedding since they just applied it for the whole year. The bands are adjusted for married but still it is typical that a lower earning spouse has to do a bunch of paperwork to have extra tax withheld from their paycheck before with the standard withholding for their income they would end up with a huge tax bill.

@OneAmberFinch
There is one very big financial advantage to getting married or being in a civil partnership. When you die you can pass all your money to your OH tax free and later your OH can pass twice the IHT free allowance on to your children.

I do love hearing all these opinions even if I'm disagreeing with some so thank you everyone who has contributed to this thread so far!

I am picking up on a theme from a few posters that it's actively desirable that women should go back to the workforce and it's a feature, not a bug, that the most financially optimal arrangement is that incomes are equal between spouses.

This is so desirable in fact that couples should not even have the OPTION to file jointly in case it encourages them to make the "wrong" choice i.e. choose for a woman (probably) to stay home or work less in a commercial job?