Sunday, March 19, 2000
Income tax break for married
couples disappearing in England
A story published today in the Sunday Times of London reports that
the government is offering few financial incentives to get married. The married couple's
allowance has been cut back by successive governments and it will disappear in April for
couples under 65.
It used to be quite generous. For example, in 1990 the allowance was
worth almost £700 a year to a higher-rate taxpayer. Now married couples are entitled to
tax relief at 10% on £1,970 - equivalent to an annual saving of £197.
Older couples will still be able to claim the married couple's
allowance. They keep their entitlement if either spouse was born before April 6, 1935.
However, the cut-off date does not move as the years go by, so this benefit too will
eventually wither away.
William Hague, leader of the Conservative party, has criticized the
government for abolishing the allowance - although the story points out that Tory
chancellors have contributed to its decline over the years.
The rules that govern capital-gains tax (CGT) are kinder to married
couples. Everybody is entitled to a CGT allowance of £7,100 for the current tax year. If
you sell a portfolio of shares, you are therefore liable for CGT on the gain above the
tax-free threshold - at your highest income-tax rate.
A person is liable for the tax not only on gains, but also on gifts
- unless the gift is to your husband or wife. You can therefore minimize any CGT bill by
giving away assets to your spouse.
But cohabitants gain the advantage over married couples if they own
two homes. Normally, you must pay CGT on the sale of any property other than your
principal residence. If you are one of the hundreds of thousands of people who have a
second home, the tax can prove expensive.
Unmarried couples can legitimately avoid the tax by putting each
home in a different name. The loophole is not open to married couples.
Rules on inheritance tax (IHT) tend to favor married couples. Gifts
to your spouse, for example, are free from IHT. You can therefore bequeath your estate to
your husband or wife when you die and they will not have to pay 40% tax. IHT is normally
payable if your estate is worth more than the tax-free threshold of £231,000.
If you are not married, you could be in a precarious position when
your loved one dies. If there is no will, intestacy laws do not necessarily recognize a
cohabitant, even if you have lived together as man and wife for many years.
It is also rare for personal pensions or company schemes to grant
automatic rights to the unmarried partner of an employee.
And if you die after retirement, there is no guarantee that the
person living with you will receive a widow's or widower's pension.
Most schemes, however, allow you to nominate a beneficiary if you
die in service - and the trustees should not object if you choose your girlfriend or
Thursday, March 16, 2000
Common law relationships
gaining popularity in Canada
A report released today by Canada Statistics Daily shows that more
couples in Canada are living together without getting married.
Although common-law unions break up more often than marriages, the
report says that many people keep returning to them. While marriage still accounts for the
majority of relationships, its traditional dominance has given way to the growing
popularity of common-law unions.
According to data from the 1995 General Social Survey, women whose
first conjugal union was a common-law relationship were almost twice as likely to separate
as women who married first.
The data show that, among women aged 30 to 39, almost two-thirds
(63%) of those whose first relationship was common-law had separated by 1995, compared
with only one-third (33%) of women who had married first.
Women in their 40s showed a similar pattern. About 61% of women who
started in a common-law relationship had separated by 1995, compared with 36% who married
Women whose first marriage had dissolved were very likely to form
another union. However, they were then more likely to choose common-law over remarriage.
This was especially true of women in their 30s and 40s, who were twice as likely to live
common-law as to remarry.
Women who had started their conjugal life in a common-law
relationship were just as likely to form new relationships if their relationship ended as
those who had married first. But they were substantially more likely to prefer common-law
for their second relationship than were women who had married first.
The analysis shows that, while married-first women in their 30s were
twice as likely to choose common-law as marriage for their second union, women whose first
relationship was common-law were an estimated six times more likely to do so in their
The instability of common-law arrangements and the rising rate of
dissolution of all conjugal unions suggest that more people may spend more time living
alone or, conversely, may be involved in more short-term relationships.
The report says that young people more inclined to live common-law
with their first partner. In 1995, the proportion of women who started their first
conjugal union in a marriage varied widely with age. About 95% of women in their 60s had
married first, compared with 56% of women in their 30s and 35% of those in their 20s.
Clearly, young people are far more inclined to opt for common-law in
their first conjugal relationship. In 1995, only 1% of women aged 60 to 69 lived
common-law in their first union. In contrast, 38% of women aged 30 to 39 chose common-law
first, while 52% of those aged 20 to 29 chose common-law.
At the same time, the likelihood of the first relationship ending in
divorce or separation has increased significantly. While 25% of women aged 60 to 69 had
experienced a break-up at some point in their lives in 1995, over 40% of those in their
30s and 40s had already gone through one. This suggests that breakdowns of first unions
are happening earlier in life.
Tuesday, March 14, 2000
households spending more
A story published today by AsiaPulse reports that even though
individual consumption has been stuck in a slump, spending by single-person households,
which make up 25% of Japan's households, is apparently picking up. Monthly spending per
single-person household rose 3% to 189, 117 yen in 1999, shows a survey released Tuesday
by the Management and Coordination Agency.
The figures are inflation-adjusted. The first growth in such outlay
in three years is thanks to spending on durable goods for educational and entertainment
purposes, including personal computers and communications costs for Internet use and cell
phones. Spending on such durable goods increased 4.8%, while that for communications rose
9.5%. Spending on domestic and overseas travel leaped 46.4% on a nominal basis.
Spending on automobiles surged 145.1%. The survey, however, revealed
a dip in expenditure on clothes and food. The households surveyed spent 8.9% less on
clothes and shoes, and 1.5% less in food.
By age bracket, single persons under 35 spent 9% more overall, while
spending by those aged 60 years or older dropped 0.5%. Consumption by those aged 35-59
Young single people were relatively profligate when it came to
spending on Net-related products and services, and on education and entertainment. They
spent 28.7% more than the previous year on communications, including hooking up to the
Net, while education and entertainment costs rose 13.1%, according to the report.