The TLRC responds to the DTI's consultation on a framework for the legal recognition of same-sex couples.

Responding to the DTI's consultation on Civil Partnerships, the TLRC has drawn attention to the variety of treatments currently accorded married and cohabiting couples under the taxing Acts. They suggest that Civil Partnerships could be accorded the same tax treatment as married couples, but at the same time urge the government to review and simplify the inconsistent assessment system currently in place for all families.

This confusion derives in part from the different approaches adopted by the tax and social security systems. It is just over 10 years since the introduction of separate taxation for married couples. The social security system, however, has necessarily continued to function by reference to the family unit, whether or not the unit is formally constituted by marriage. The recent introduction to the tax system of tax credits has produced an inevitable clash between these two approaches.

At the same time different taxes – such as inheritance tax and capital gains tax - have adopted different approaches to marriage, separation and divorce. Some of these differences are no more than a matter of history and legislative drafting; others are based on more solid policy grounds. The overall outcome is a policy mix that looks confused.

The DTI's consultation on a concept of Civil Partnership does not at this stage extend to the taxation arrangements for such partnerships. In theory it would be possible in many cases to extend the taxation treatment of married couples to those same-sex couples who enter into a civil partnership. The confused state of current arrangements for marriage, however, suggests that the time is ripe for a systematic review of the way in which the tax system recognises marriage and the family.

Ends

Notes to Editors

1. The Tax Law Review Committee was set up by the IFS in autumn 1994 to ask whether the tax system was working as intended, efficiently and without imposing unnecessary burdens. Its role is to keep under review the state and operation of tax law in the UK, which it does by selecting particular topics for study. It does not seek to question Government policy as such but to look at whether existing arrangements achieve the policy in a satisfactory and efficient way. Among its current projects is one that is considering the operation of the tax system in relation to the family.

   The Committee's members represent a broad cross-section of informed opinion from industry and commerce, the judiciary, academia, the professions and political and public life.

2. For further information please contact Emma Hyman (IFS), Mark Robson (Lady Margaret Hall, 01865 274322, ) or Malcolm Gammie Q.C. (TLRC Research Director, One Essex Court, 020 7583 2000).