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Accountants are likely to see a surge in requests for tax credit advice from couples considering getting married, the Tax Advice Network has warned, following the publication of a report highlighting the failings in the current system.
According to the independent tax advice organisation’s chairman, Mark Lee, the Individualists Who Co-operate paper by think-tank Civitas highlights that the current tax credit system is not fit for purpose and makes two related points:
- Working tax credits encourage part-time work instead of full-time work.
- The system penalises the formation of couples because some parents can be over 20% worse off if they live together.
Mr Lee said that, with over 2.2 million couples currently co-habiting in the UK, the more the media give credence to reports that tax is an issue to consider when getting married, the more accountants will need to be familiar with all of the related tax issues.
He said: ‘More and more accountants will find themselves having to advise on tax credits - and although their motivation for doing so will be to assist clients in securing the levels of tax credits to which they are “entitled”, it could also lead to them being asked about the impact on tax credits claims if a couple marry.
‘Marriage isn't a relevant factor,’ added Mark.
‘Entitlement to tax credits is determined by household income levels regardless of whether or not the couple are single, married or in a formal civil partnership. It's living together that can reduce an entitlement.’
