In 1989, the UK operated an Income Tax system in which a husband and wife's tax liability was jointly assessed (although it was possible to opt for the wife's labour income to be taxed separately). In 1990, individual taxation for couples was introduced, resulting in significant opportunities for redistributing unearned income between spouses, and significant changes to work incentives, particularly for women with middle or high income husbands.

Changes to participation and marginal tax rates, and changes in employment and labour supply will be described, and the changes will be placed in the context of the significant changes to the tax system in the 1980s. Our analysis will use the policy change to investigate and motivate two key questions. First, they involved significant changes in work incentives for wives with high income husbands, a group for which we have little knowledge about labour supply responsiveness. Secondly, we will address the debate about the appropriateness of independent taxation in the context of 'creeping' jointness with the expansion of family-level means-tests.