By "the couple penalty", we mean the change in entitlements - usually a fall - to benefits and tax credits that occur when two single people (with or without children) start to cohabit. In theory, the existence of a couple penalty can give couples an incentive to live apart, rather than together, and to act fraudulently when claiming means-tested benefits or tax credits. With this short project, we intend to provide a descriptive analysis of the "couple penalty" and how it has changed in recent years.

The analysis will be based on the Family Resources Survey combined with our tax and benefit model, TAXBEN, and so we will analyse the average size and distribution of the couple penalty across the UK population, and how it varies with characteristics of the family/single person (how many children, earnings of woman or man, housing tenure). We will also break down the couple penalty into:

• That due to housing benefit and council tax benefit (which require one to make assumptions about housing choices)
• That due to childcare element of the working tax credit
• That due to other parts of the benefit and tax credit system (ie primarily the means-tested benefits, and the other tax credits)

We may be able to say something about the impact of forming a couple of individual incomes (such as the way that a tax credit award which unambiguously belongs to a single person becomes a jointly-owned award for an individual in a couple) as well as on family incomes.

This work will build on work done by Dan Anderberg and colleagues with a research grant from the Nuffield Foundation ("Partnership Penalties and Bonuses Created by UK Welfare Programs" by Dan Anderberg, Florence Kondylisy and Ian Walker, CESifo Economic Studies, 2008, and "Tax credits, income support, and partnership decisions," by Dan Anderberg, International Tax and Public Finance, 15(4), pp499-526). There has also been regular analysis of this issue by Don Draper, published by CARE.

We intend to publish findings in early 2010.