IFS
PRESS RELEASE
THE INSTITUTE FOR FISCAL STUDIES
7 Ridgmount Street, London WC1E 7AE
020 7291 4800, mailbox@ifs.org.uk, www.ifs.org.uk
For immediate release:
18 June 2007
Contact: Bonnie Brimstone
or Robert Markless on 020
7291 4800
Taxation of the Family
Since the introduction of independent taxation for husband and wife, most people are taxed individually,
regardless of their family circumstances. However, significant exceptions remain with married couples
being both advantaged and disadvantaged for income tax, capital gains tax and inheritance tax purposes.
Following the Civil Partnerships Act in 2004, the tax treatment of civil partners has been aligned with that
of married couples. Recently questions have been raised as to whether couples who are not married should
be treated the same as married couples/civil partners. The Burden sisters raised with the European Court of
Human Rights whether the current inheritance tax rules are discriminatory. The Law Commission is
considering the financial hardship suffered by cohabitees on separation or death.
Different taxes – income tax, inheritance tax and capital gains tax - adopt different approaches to the
taxation of couples. They adopt different approaches to the taxation of couples on separation, divorce or
death. While each rule may be separately justified, no coherent structure to the arrangements emerges.
The tax credit system has added a further layer of complexity and has focused attention on just how the
family unit should be defined.
In the discussion paper produced for the Tax Law Review Committee, Tracey Bowler examines the tax
treatment of three couples in differing family contexts: a married couple with two children under the age of
16; an unmarried couple in a stable and long term relationship with two children under the age of 16; and a
family where the couple have recently formed a relationship and have children from different
relationships. The discussion paper considers the tax treatment of the couples while the relationship is
ongoing, after break-up and on the death of one of the couple.
The discussion paper also considers the potential for anti-discrimination challenges in the European Court
of Human Rights and the implications of the policies of the Government, the Conservatives and the Liberal
Democrats in this area.
The discussion paper is published in order to encourage debate on these issues and to inform the TLRC’s
further work in this area.
ENDS
Notes to Editors:
1. The Tax Law Review Committee (TLRC) was set up by the IFS in autumn 1994 to ask whether the tax
system was working as intended, efficiently and without imposing unnecessary burdens. Its role is to keep
under review the state and operation of tax law in the UK, which it does by selecting particular topics for
study. It does not seek to question Government policy as such but to look at whether existing arrangements
achieve the policy in a satisfactory and efficient way. The Committee's members represent a broad crosssection of informed opinion from industry and commerce, the judiciary, academia and the professions.
Among its current projects is one considering the taxation of the family.
2. For further information please contact Bonnie Brimstone (IFS), or Malcolm Gammie QC TLRC
Research Director, (IFS) (mgammie@oeclaw.co.uk).
3. An electronic copy of the TLRC Discussion Paper no.6 on "Taxation of the Family" is available on our
website at: http://www.ifs.org.uk/publications.php?publication_id=3984