Expand transferable marriage allowance

Allowance design

Reform's Contract proposed a UK 25% transferable marriage allowance, meaning no tax on the first GBP 25,000 of income for either spouse when finances allow.

• Current transferable allowance is much smaller.
• One-earner couples gain most.
• Second-earner incentives may weaken.

Core trade-offs

Eligible couples gain a tax cut, especially one-earner households. The cost falls on the Exchequer and the policy does little for single adults or couples already using both allowances.

• One-earner couples gain directly.
• Single people receive no benefit.
• Second-earner work incentives may fall.

Illustrative fiscal impact

+GBP 8.0bn to +GBP 35.0bn. Central estimate: +GBP 18.0bn.

• Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
• 25% transfer is the main scale marker.
• Gross costs and receipt offsets are separated in methodology.
• Behaviour and pass-through widen the range.
• This is not an official costing.

Economic impact by 2027-28

• Jobs: Can weaken second-earner incentives, especially for lower-earning spouses.
• Wages: Raises net income for eligible couples; no wage-floor effect.
• Prices: If borrowing-funded, adds modest demand pressure rather than supply.
• GDP / productivity: Likely neutral or negative if it reduces second-earner labour supply.

Assessment

This is a family-tax preference, not a growth policy. It helps some one-earner couples, but excludes singles and many dual-earner households. The likely GDP effect is weak and could be negative if second earners reduce hours. The fiscal cost is very uncertain without a full household model.

Confidence: Low. The broad allowance percentage is stated, but eligibility, interaction with personal-allowance tapering and devolved tax effects are unclear.

Main risks

• Second-earner effect: Transferability can reduce incentives for lower-earning partners to work more hours.
• Distributional skew: Benefits go to eligible couples, not single adults or many poorer non-taxpayers.
• Fiscal drag loss: Raising effective allowances reverses future fiscal-drag receipts.

Safeguards

• Publish household distributional analysis.
• Protect second-earner work incentives.
• Phase only after identified funding.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology: Expand transferable marriage allowance Internal - PolicyLens, 2026
• Tax by Design: The Mirrlees Review Academic review - Mirrlees and review team, IFS and Oxford University Press, 2011
• Direct effects of illustrative tax changes Official tax data - HM Revenue and Customs, 2026
• Our Contract with You Party policy document - Reform UK, 2024
• Income tax: rates and allowances Parliamentary briefing - House of Commons Library, 2026
• Response to Reform UK policy announcements Think-tank analysis - Institute for Fiscal Studies, 2025
• The Optimal Income Taxation of Couples Academic article - Kleven, Kreiner and Saez, Econometrica, 2009
• Our Policies Party policy source - Reform UK, 2026

Other Reform UK policies

• Raise income-tax thresholds
• Cut household energy taxes
• Cut fuel duty by 20p
• Cut stamp duty below GBP 750,000
• Raise inheritance-tax threshold to GBP 2m
• Cut corporation tax to 15%
• Raise VAT threshold to GBP 150,000
• Abolish IR35 rules