Reform the Marriage Allowance: The case for recognising marriage in the tax system and why we should keep the Marriage Allowance
Frank Young, November 2022
Marriage is disappearing in Britain. 2021 was the first year on record that the number of children born to unmarried couples exceeded the number of children born to married couples. New research by Frank Young, head of the Children and Families Unit at Civitas, predicts that there will be almost no new marriages in England and Wales by 2062. This Civitas publication reviews the Marriage Allowance and trends in family formation, arguing that we urgently need a plan to rescue marriage. Across Europe the UK has one of the lowest marriage rates.
Since income tax was first introduced in the UK in 1799, the British tax system has always recognised marriage. There are growing concerns that a future government will abolish the Marriage Allowance by stealth and become the first government in 223 years to remove any recognition of marriage from the tax system.
The Marriage Allowance was introduced in 2015 and restricted to basic rate taxpayers to close couple penalties in the welfare system, where it pays more to live apart than together. The poor design of the allowance and its limited financial value to couples has seen uptake remain low over seven years, with the government recently confirming that fewer than half of eligible couples have claimed the Marriage Allowance for the most recent year (2019-20). As a consequence of this low uptake, this research has identified a £2.4 billion underspend in the Marriage Allowance since its introduction in 2015.
Not only does the current Allowance fail to reduce disincentives to form stable couple relationships, but the government is also not spending the money set aside to support married couples.
Future governments should resist any attempts to cut the Marriage Allowance and instead find ways to review our taxation of families to improve family stability and support parents. This will involve longer-term planning as opposed to short-term cuts but could be popular with the public.