A million couples face higher income tax rates under a Labour government, despite Jeremy Corbyn’s vow not to raise taxes for people earning under £80,000.
Labour has pledged to scrap the married couples tax allowance if it enters government, meaning an effective £230-a-year rise in income tax for the million couples who claim the benefit.
The tax break, which was introduced by David Cameron under the coalition government, is only offered to couples whose combined earnings are less than the £56,500 higher rate threshold — well below Labour’s £80,000 threshold.
Labour’s manifesto promised: “A Labour government will guarantee no rises in income tax for those earning below £80,000 a year . . . Under Labour’s plans, 95 per cent of taxpayers will be guaranteed no increase in their income tax contributions”.
The allowance was originally a Conservative policy when David Cameron was in opposition and was introduced by the coalition government in April 2015 as part of a push to incentivise marriage.
Advertisement
It allows someone to transfer £1,150 of their tax-free personal allowance to a partner. This is worth up to £230 a year for families — and is available only to people earning less than the higher rate of income tax.
But HMRC revealed last year that only one million of the 4.2 million eligible couples have claimed the benefit.
Labour did not mention scrapping the allowance in its manifesto but the policy was included in the associated costings document. Together with reversing cuts to capital gains tax and inheritance tax, and introducing a bank levy, the party says it will raise £3.7 billion a year.
David Gauke, the chief secretary to the Treasury, accused Labour of having a “black hole” in its spending plans.
“Jeremy Corbyn has already broken his promise on tax,” he said. “Under his plans taxes would rise for millions of ordinary working families across the country even before his shadow chancellor has had to pay for the black hole at the heart of their uncosted spending plans.
Advertisement
“Putting Jeremy Corbyn in Downing Street would mean the highest taxes this country has ever faced in peacetime, the Brexit negotiations at risk and our national security in the hands of Diane Abbott.
“The only way to keep taxes low and economy strong is to vote Theresa May and the Conservatives on Thursday.”