The Failure of the UK 'Marriage Allowance'

The United Kingdom’s Marriage Allowance has failed. Ten years ago, former UK Prime Minister David Cameron announced plans to establish a tax break for married couples, arguing that a small rebate for low to middle income married couples would send an important “signal” of support for the institution. Opposition from his chancellor and Liberal Democrat coalition partners meant the first payments were not made until 2015. It has been downhill ever since. 

The allowance is worth a maximum £252 to eligible couples on low to middle incomes, who can transfer 10% of any unused, tax-free allowance (in the UK this means any personal income up to about £12,500 [or $16,000]) to their partner (in reality this means a transfer from husband to wife). The complex mechanism for claiming the allowance through an annual tax assessment process means take-up rates have struggled to exceed 50% of eligible couples. In the last year, the UK government has data for 48% of eligible couples receiving the allowance. According to a government analysis, 4.2 million of the 12.2 million (34%) couples in a marriage or civil partnerships (in reality there are very few civil partnerships in the UK) are eligible for the Marriage Allowance.

The Marriage Allowance was always a token at best, worth little more than a few hundred pounds. It is also hugely complex—claimed through an annual tax assessment rather than paid up front in cash. This is a long way from the design of an annual rebate advocated by think tanks in the early part of the twenty-first century, who called for a marriage payment to close the “couple penalty”—a mismatch in our tax and benefits system that means it pays more to live apart than together, let alone get married. 

Analysis by the UK-based Institute for Fiscal Studies suggests the allowance is distributed towards the mid to higher end of the basic rate tax threshold (a 20% tax band on earnings up to £50,000 a year) with eligible families clustering around the third to sixth income decile groups. (In other words the middle, middle classes and not the poorest, where the UK marriage gap is widest.)

Even marriage advocates would agree the allowance has been a failure: take-up has been low, marriage rates have continued to decline at an alarming rate, and recent analysis by the Civitas think tank shows £2.4 billion (or $3 billion in U.S. dollars) has been left unclaimed by married couples. This unloved tax break will likely disappear soon, with little prospect that there is anyone left in the UK parliament willing to defend the allowance or even stand up for the institution of marriage as the best poverty fighting tool we have.

Since 2015, when the first claims were made, expenditure on the allowance has risen to almost £600 million ($760 million) in 2022, but about £400 million a year is left unspent and returned to the Treasury, never to be spent on the most stable family type we know. To put that into context for American readers, adjusting these figures for total U.S. government spending, that is roughly equivalent to $1.2 billion going unspent on supporting marriage.

The UK has recognized marriage in the tax system since 1799, but with a new government likely in 2024, that two-century unbroken record is likely to come to an end soon, only a few decades before marriage is all but set to disappear from the UK. Recent analysis suggests that there will be almost no new marriages by 2062 if the current trend away from marriage continues at its alarming pace. 

A new left-wing government will almost certainly abolish the Marriage Allowance. We need to understand what has gone wrong and start again. It is a myth that talking about marriage is politically unpopular. In a recent opinion poll, three-quarters of UK adults supported the idea of the government making payments to married couples to strengthen families. 

The first thing the UK government should do is simply rediscover the word “marriage.” It is an absurd political taboo in the UK where politicians will talk about families (just about) but never mention marriage. 

The UK government needs to accurately assess the couple penalty, using tax and benefit data to provide real-time annual updates. Only government can do this, but some estimates from researchers at the Policy Exchange  suggest it could be as much as £8,000 a year—a huge disincentive to coupling in the tax and benefit system. If the government were to publish annual data, it would change the terms of debate and begin a conversation, at the very least, on the consequences of this penalty in our tax and benefits system. Our anti-family tax system needs to be completely reviewed but the focus on marriage shouldn’t be lost.

More could be done to focus a new marriage payment on couples with young children. In its current form, fewer than four in 10 couples eligible to receive the Marriage Allowance will have children.

Even a modest review to restrict the allowance to married couples with pre-school children would have a significant impact. Approximately 17 to 18% of families in the UK have pre-school children. This suggests that approximately 690,000 to 730,000 families would be eligible under this targeting. By targeting in this way, the same £962 million allocated by the government for the Marriage Allowance, all eligible couples could save approximately £1,350 a year, not enough to close the couple penalty but a long way from where we are now.

With these changes, the payment would go from inconsequential to something that could have a real impact on couples furthest away from marriage, where the disincentives are largest in our anti-family welfare system. Conservatives (both big and small 'c') should be as enthusiastic about lowering the cost of family formation as they are about business formation. For marriage advocates looking to the future, the failure of the Marriage Allowance is a set back that will thrown back at us by our critics for years to come. We need to brush ourselves off, pick ourselves up, and come back with a better plan that will reboot marriage in the United Kingdom.

Frank Young is editorial director at the UK-based Civitas think tank.