Hammond steps in to stop Scots losing marriage tax break
PHILIP Hammond is set to save hundreds of thousands of married Scots from losing a £260 tax break after the SNP’s budget.
The marriage allowance cuts the bill of basic rate taxpayers if their spouse is out of work or in lowincome employment.
But the SNP’s decision to force everyone earning more than £24,000 to pay a new 21p in the pound ‘intermediate’ rate would mean that they would no longer be eligible for the allowance.
And those paying a new lower 19 per cent ‘starter’ rate would also be excluded from the tax cut, as the legislation states it can only be claimed by basic rate taxpayers.
But the Chancellor is set to step in to reverse the consequence of the Scottish Government’s tax hikes – meaning everyone paying the starter, intermediate and basic rate in Scotland will still be eligible for the marriage allowance.
Last night a Tory source said: ‘Through the marriage allowance the Conservatives have given a boost to millions of hard-working families.
‘The Chancellor will make sure that no one in Scotland loses out on this tax break because of changes made by the Scottish Government.’
It is understood that the Treasury will write to Finance Secretary Derek Mackay on Monday to confirm that officials are ‘happy to make technical changes’ to legislation meaning that no one will miss out on claiming the tax break despite his budget.
The letter will also confirm that Her Majesty’s Revenue and Customs (HMRC) will make the necessary changes by April when the SNP’s new tax rates come into force.
The move will require changes to legislation, but it is understood that Treasury chiefs are confident this can be done before or retrospectively, with no impact on taxpayers.
The plan means anyone earning up to £43,430 will be able to continue to claim the allowance if their husband, wife or civil partner does not work or earns a low wage.
Officials from the Treasury, HMRC and the Scottish Government had been working together since Mr Mackay announced his tax plans in December.
The SNP’s changed tax rates mean that only those earning between £13,850 and £24,000 will be paying the basic rate.
Those earning £24,000£44,273 will pay a 21p intermediate rate; for earnings between £44,273 and £150,000 there will be a higher 41p rate and salaries of more than £150,000 face a 46p top rate. In addition, a ‘starter rate’ of 19p will be paid by those on £11,850 to £13,850.
If the UK Government had not stepped in those in the new starter and intermediate rates would have been unable to claim the marriage allowance.
Scottish Conservative finance spokesman Murdo Fraser said that the UK Government had been forced to ‘come in and clean up the SNP’s mess’ again.
He said: ‘It’s more evidence of tax proposals that were riddled with unintended consequences. If the SNP spent more time coming up with ways to grow the economy, and less time hitting people in the pocket, mistakes like this wouldn’t happen.’
Under the marriage allowance, when one person in a marriage earns less than £11,500 they are able to transfer up to £1,150 of their taxfree personal allowance to their spouse. This can save a couple up to £230 a year, but the potential saving will rise to £260 from April.
‘Forced to clean up SNP’s mess’