Election 2010: 4m married couples in line for Tory tax-break

Published on Friday 9 April 2010 23:14

FOUR million married couples are to be offered tax breaks worth up to £150 a year, under Conservative proposals to be unveiled by David Cameron.

• Chancellor Alistair Darling and his Tory shadow George Osborne go head to head outside Westminster they try to persuade BBC viewers they are best placed to manage the economy

Wives or husbands who do not work will be able to transfer part of their tax-free allowance to their spouse – if their partner's income does not exceed 44,000.

The total cost of the policy, estimated at 550 million by the Institute for Fiscal Studies, would be paid for through a new bank tax, party officials said last night.

Mr Cameron has been under mounting pressure to detail how he would meet a promise to recognise marriage in the tax system despite a record national deficit.

Under the new proposals, basic rate taxpayers would be allowed to transfer 750 of their personal allowance to a spouse. Officials said the measure would benefit just under a third of the country's 12.3 million married couples, with the less well-off gaining the most.

Mr Cameron said last night: "I think it important that we recognise both marriage and civil partnerships in the tax system.

"I have said that is a commitment we are going to make for the parliament."

The 550m would be paid for from an estimated 1 billion the party says would be raised from a levy on banks, which Mr Cameron promised to implement last month. The remainder would be used to reduce the UK's 167bn deficit.

Mr Cameron has announced that a Tory administration will impose the levy in the expectation that it will be implemented internationally.

But the party has also pledged to press ahead unilaterally with the move if necessary, although that would be on a far more limited basis and raise less.

The marriage tax break was adopted by the party after being suggested in former leader Iain Duncan Smith's blueprint to tackle the social problems of "broken Britain".

However, Mr Cameron was subsequently forced to concede that it could not afford a blanket shared allowance for all couples.

And he then had to issue an insistence that it would be brought in by a first-term Tory government, after appearing to signal the policy was no longer a firm commitment.

Under Tory proposals, those earning between 6,600 and 44,000 would benefit, with the full 150 going to those earning from 7,300 to 42,500 and with a partner not using their full allowance.

Labour has previously attacked the move as a form of "social engineering" that would punish many good unmarried parents and stigmatise their children.

And the Liberal Democrats last night dismissed the Tories' plans as an anachronism which belonged in another age.

In a speech today, party leader Nick Clegg will say: "The proposal for tax breaks for marriage are patronising drivel that belong in the Edwardian age. David Cameron clearly has no idea about modern life.

"Every family is different, and instead of creating rigid rules or special policies that help some families but not others, we need a new approach from government: one that is flexible and doesn't dictate to families how they should live."

Meanwhile, Mr Cameron faces continued pressure over his National Insurance freeze, as Labour claimed the move would become a "jobs killer", slashing as many as 40,000 posts across the country.

The Conservatives revealed yesterday that their plan not to implement Labour's NI increase, which will cost 6bn in reduced tax income, will in part be paid for by a recruitment freeze across the public sector.

Tory adviser Sir Peter Gershon said agency and contract jobs would also be cut, with experts predicting that between 20,000 and 40,000 posts would wither away as a result.

It led Chancellor Alistair Darling to warn the jobs cull could spill over into the private sector, where thousands are reliant on public sector contracts.

Both Labour and the Lib Dems conceded that, whoever wins the election, jobs will have to go one way or another, in order to cut the country's 165bn deficit.

The fresh row over jobs comes with the Tories having faced nearly two weeks of demands to explain exactly how they would meet the shortfall from axeing Labour's NI increase. That increase, due next April, aims to raise a further 6bn a year for the Exchequer. In total, the Tories want to save an extra 12bn by the next financial year.

Yesterday, Sir Peter said about 2bn could be found from freezing recruitment, up to 4bn from cancelling IT projects, with reduced spending on consultants and renegotiating contracts making up the rest.

Last night, Labour would not be drawn on a report that its manifesto – to be published next week – would include measures that would make it more difficult for foreign companies to mount hostile takeovers of British firms.

BBC's Newsnight reported there would be a commitment to amend the law to give ministers the power to block bids where there was deemed to be a national interest at stake.