Same-Sex Couples Affected By New Tax Rules

Before December 2005 same sex couples were categorised as individuals for benefit purposes. After this date, however, with the introduction of the Civil Partnership Act those living together as a couple would be seen as such for tax credits and benefits. Despite this being a victory for homophiles it could make them worse off in the long run.

The Chartered Institute of Taxation has warned that same-sex couples in the UK could have inadvertently run up as much as £1,600 in unpaid tax following changes to the law.

"Previously same-sex couples were treated as single people for the tax credit system," said a spokesman for the Chartered Institute of Taxation.

"So two women who live together as a couple with one child each, would each have been treated as single parents. From December onwards these couples' tax credits may go down - perhaps by as much as £98 a week."

Because previously partners in a same-sex couple were assessed separately, the income of a same-sex partner was not taken into account when working out benefit and tax credit entitlement, but now it is. The choice for same-sex couples is therefore to disclose the fact that they are partners/cohabiting as a couple, or to review their living arrangements so that they are not treated as a cohabiting couple. Declaring themselves as a couple often results in a sudden reduction in tax credits paid, to which the couple will need to adjust.

HM Revenue and Customs warned about the changes last year but the institute says that it is concerned that the message may have been lost amid the celebrations.

What are Tax Credits?

Tax credits are payments from the government. If you're responsible for at least one child or young person who normally lives with you, you may qualify for Child Tax Credit. If you work, but are on a low income, you may qualify for Working Tax Credit.

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