Same sex couples may owe the taxman over £1,600 The Chartered Institute of Taxation (CIOT) warns same sex couples that they may owe the taxman £1,600.
Everyone knows that on 5 December 2005 the law changed to allow same sex couples to register as Civil Partnerships. Less well known is that ALL same sex couples, whether Civil Partners or not, are to be treated as a unit for tax credits (and other benefits) from the same date.
Anne Redston of the Chartered Institute of Taxation says: “Previously same sex couples were treated as single people for the tax credit system. So two women who live together as a couple with one child each, would each have been treated as single parents. From 5 December onwards these couples’ tax credits may go down – perhaps by as much as £98 a week.”
HM Revenue and Customs have warned of this, but this bad news seems to have been overlooked in the excitement of the new Civil Partnership rules.
The real problem is not only the lower tax credits. Failure to tell HMRC by 5 March 2006 means that the backdating rules come into play.
Anne Redston says: “Same sex couples who are claiming tax credits should have told HMRC by now about their living arrangements. As each day passes their overpayment position could be getting worse. By now it could be as much as £1,600.”
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For press information contact Simon Goldie on 020 7245 4122 (direct line). Email sgoldie@ciot.org.uk
Notes to Editors
1. The £14.10 per day overpayment arises from the fact that the couple will get only one working tax credit basic element and one lone parent element between them, and only one threshold will be used to means test their credits against their joint income.
2. HMRC publicised this information on their website on 24 November 2005 and in their Tax Credits Newsletter in summer 2005. HMRC warned claimants of the need to notify the change in their circumstances and the penalties that might result if they failed to do so.
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Simon Goldie
