The Taxation of UK Families CARE Report
This report addresses issues relating to the taxation of UK families:
how heavily they are taxed compared with their counterparts in other developed
countries
how they are taxed compared with households without children
changes to the UK tax and benefits system that would ensure fairer outcomes.
Tax policy should be informed by knowledge of how well off different types of household are. It is important to know who the ‘better off’ are if they are to bear a heavier tax burden than those who are ‘worse off’. A household’s position in the income distribution depends not only on its disposable income, but also on its size and composition. Gross income is a poor guide to how well off any particular taxpayer is.
The UK tax system treats families unfairly. The amount of tax they pay bears little relationship to how well off they are. Some families pay more tax than other households that are considerably better off. Some in the bottom half of the income distribution even pay higher rate tax and are liable to the High Income Child Benefit Charge. This happens because, unlike benefits, income tax is based on the individual and takes little account of family responsibilities. This problem does not occur in most other developed countries.