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Scrap the Love Tax

January 27, 2016 9:55 AM

A pair of wedding rings (Jeff Belmonte. Licensed as Creative Commons Attribution 2.0.)Liberal Democrats are rallying to stop plans aimed at penalising up to one million single parents who move in with a new partner.

The party has said changes to Universal Credit - dubbed the 'Love Tax' - could affect up to a million low income working single parents. It comes weeks after the Conservative government was dashed in its attempts to cut tax credits for families.

The IFS has said latest planned cuts would mean a single parent could be lose out by around £1,000 a year. Liberal Democrats in the House of Lords have launched a bid, due be debated on Wednesday, to scrap the cuts to Universal Credit.

The party's leader Tim Farron said:

"The Conservatives claim they want to support two parent families, yet their pillaging of Universal Credit will mean that single parents who find a new partner will actually be penalised.

"It is tantamount to a Love Tax. Imagine being a single parent, working on a low income, then finally finding happiness with someone and realising you're going to lose over £1,000-a-year as a result.

"We stopped the original attack on tax credits and we will stop this. The Government should not use this as an excuse to cut their support. That is why they must rethink these brutal cuts to Universal Credit."

The Universal Credit (Work Allowance) Regulations will mean that new Universal Credit claimants, or those who report a change of circumstances will lose an average of £1,080 a year according to the IFS.

The changes of circumstance that can trigger an end to transitional protection for Universal Credit claimants (and so triggering the cut) include a person joining the household, and can be found here: https://www.gov.uk/government/uploads/system/uploads/attahment_data/file/181344/upbn-transitional-protection.pdf

Current HMRC statistics suggest that there are currently 1,042,000 single parents claiming Tax Credits, which will be replaced by Universal Credit. Research from the Centre for Population Change suggests that between 50 and 60% of single parents will find a new partner within 5 years, rising to 70% within 10 years.