My hon. Friends will be aware that at the last election the Conservative party set out a policy of allowing married couples and civil partners to transfer up to £750 of unused tax-free personal allowance where the recipient is a basic rate taxpayer. They will also be aware that two points in the coalition agreement are relevant to this debate: first, our commitment to increasing the personal allowance to £10,000, to be prioritised over other tax cuts; and secondly, the provision for Liberal Democrats to abstain on Budget resolutions introducing transferable tax allowances for married couples without prejudice to the coalition agreement.
I want to be very clear that the Government support the principle behind the new clause proposed by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton). We are committed to recognising marriage in the tax system. As we have made clear, and indeed as my hon. Friend the Member for Gainsborough (Sir Edward Leigh) has pointed out, we are committed to legislating for that in this Parliament. The Prime Minister has made it clear that we will be announcing our plans shortly.
I know that my hon. Friend the Member for East Worthing and Shoreham wants us to be specific on implementation. I can assure him that we want to implement this at the earliest opportunity. Of course, recognition of marriage involves a new attribute to our income tax system, requiring Her Majesty’s Revenue and Customs to link married couples in a way that does not currently happen. That is deliverable, but I am not going to set out a timetable today. Once we are able to make an announcement on timing, the Chancellor will do so, but I repeat that we want to do this as soon as possible.
There are some differences between the Conservative party’s position at the last election and new clause 1. The new clause is targeted at a subset of married couples—those with children under the age of 5—and does not limit the amount of the allowance that could be transferred, although it gives the Chancellor the ability to restrict that by order. However, it does not apply any income limits or restrictions on the rate of relief, which means that it could provide double the benefit to those paying tax at the higher rate. Obviously we want to make sure that this is well targeted.
There are some specific points about new clause 1 that would need to be addressed regarding the measure of income, the definition of “child”, and the date of election set out in new section 37B(1)(c). However, I assure my right hon. and hon. Friends that we are considering these points in great detail and that an announcement of further details on how we want to take this measure forward will be made by my right hon. Friend the Chancellor in the months ahead.
I hope that my hon. Friend the Member for East Worthing and Shoreham is satisfied with those reassurances and that he feels able to withdraw new clause 1 now that I have put on record our commitment to and belief in legislating for this and our desire to implement it at the soonest opportunity.
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