Tax credits and same sex couples

Same sex couples may owe the taxman over £1,600.

On 5 December 2005 new rules were brought in allowing same sex couples to form a Civil Partnership. However, also on this day the tax credit rules for same sex couples changed whether or not they are a Civil Partnership.

Anne Redston of the Chartered Institute of Taxation says: “Previously same sex couples were treated as single people for the tax credit system. So two women who live together as a couple with one child each, would each have been treated as single parents. From 5 December onwards these couples’ tax credits may go down – perhaps by as much as £98 a week.”

This is because the couple will now be treated as a single unit for tax credit purposes. This bad news seems to have been overlooked back in December and is only now coming to light.

Same sex couples who are claiming tax credits should have told HMRC by 5 March 2006 about their living arrangements. If they haven’t done so they will have to repay to the Taxman any overpayments that have accrued since 5 December 2005. By now the overpayment could be as much as £1,600.