LAUREN DAVIDSON PERSONAL ACCOUNT

The tax system’s inconsistent approach to cohabiting couples reeks of hypocrisy

Damned if you say I do, damned if you don’t. Choose to live with your partner out of wedlock and you give up your right to the hundreds of thousands of pounds of tax breaks afforded only to spouses or civil partners. But the Government will happily still tax you as if you had tied the knot.

Take, for example, the high income child benefit charge, explained in detail on p3, which claims back the payments in the form of a tax. It kicks in when one partner in the household earns £50,000, regardless of whether this person is the child’s parent or even married to the parent.

A couple with a combined income of £100,000, split equally, would be eligible to receive £1,076 a year for their eldest child and £712 for each other child. A low or nonearning parent who moves in with a partner on a £50,000 salary would lose this benefit – but would not qualify for various marriage reliefs.

This stark discrepancy at the heart of the tax system reeks of double standards. As Steve Webb, policy director at Royal London and former pensions minister, said to me: “The Government defines a ‘couple’ in inconsistent ways and in each case it is to the disadvantage of the couple.”

A cohabiting but unmarried pair are considered “couple” enough by the Government to lose their right to child and housing benefits and universal credit. But they would not be considered a couple when it comes to the marriage allowance, which permits a low-earning person to pass on some of their tax-free allowance to their higherearning spouse, or perks that allow free transfer of assets between married people or civil partners. If one cohabitee died, the other would not inherit their state pension, would not be able to use their partner’s inheritance tax allowance to pass on more to their children and would not receive bereavement benefits.

Despite the Supreme Court ruling last year that this last point was “incompatible” with human rights law, nothing has changed. The Department for Work and Pensions’ excuse? Cohabitation is “not a straightforward concept”. Tosh. Too complicated when

Too difficult when it comes to paying out – but simple enough when raking it in

it comes to paying out – but simple enough when it comes to raking in. Frank Field MP was quite right this week when he called this defence “risible”.

Urgency is mounting. The number of cohabiting couples has increased by 26pc over the past decade, making it Britain’s fastest-growing family type – accounting for almost one in five households. Our own Prime Minister, living in the country’s most prestigious address, is one of them. It’s high time this horrifying hypocrisy was remedied.

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