The singles tax – what is it and how can you offset it?

Being single can be fun and freeing, but when it comes to the bottom line, it can also be financially ruinous compared to those who are coupled up.

“The costs of a single person are not half those of a couple,” states Rebecca Routledge, head of content at Money Wellness. “Figures from Hargreaves Lansdown show that on average, a single person spends £1,759 more a year on essentials than someone in a couple.”

This extra spend is known as the ‘singles tax’, and is a huge amount when you consider the average single person in the UK is earning only £23,708 a year, making the singles tax “a significant proportion of their annual salary”. And this is money going on unavoidable basics and fixed costs that are difficult to cut back on, like rent, council tax, energy, water, broadband and food.

As a result, “there’s a lot less financial resilience among single people” says Routledge; “49% – so practically half of people who live alone – have what’s considered poor or very poor financial resilience, and that compares to just 12% of people in couples,” she adds. “That basically means, you get one unexpected bill and you’re knackered.” This is especially the case for young single adults. ISA provider OneFamily found 29% of this demographic don’t have any emergency funds stashed away, compared to 16% of those in a relationship. While only 18% of singles are on track to buy a home (for those in couples, it’s 43%) and save for a decent pension (31% compared to 44%), meaning their futures are compromised too.

So, aside from buckling to unfair, outdated societal pressure to marry well, how can singles manage the disadvantage?

1. Remember, it’s not your fault

The singles tax is “totally out of your control. It’s nothing to do with being irresponsible”, says Routledge, who says it’s concerning that some people feel forced to move in with a partner, or stay in an unhappy, or even dangerous, relationship because of the financial implications of going it alone.

“If you live on your own, that doesn’t mean your mortgage is halved,” she points out. “You’ll use less energy and water, but that doesn’t mean your bills will be halved because there are standing charges you have to pay, so the reduction in your bills will not be proportional. Even with council tax, you get a single person reduction but it’s not 50%, it’s 25%, so you’re still paying 25% more than someone who’s part of a couple.”

None of this is on you, you just have to manage what is in your control and “be as savvy as possible”.

2. Access all your benefits

It’s important to claim any and all benefits you might be entitled to. “A lot of benefits go unclaimed every year and a lot of people who are working don’t realise they might be entitled to some support,” says Routledge. “They might be working full-time, but that doesn’t mean they’re not entitled to benefits to top up that wage, and that’s going to be based on household income, so that’s particularly pertinent to single people.”

If you’re earning less than £40k, she recommends that you investigate what you might be eligible for. A debt advice charity can do it for you, or try Money Wellness’ online benefits calculator to work it all out yourself.

“If you are really struggling with any bills, get in touch with your suppliers and see if there’s anything they can offer,” she continues. “There are lots of support schemes that companies offer for people who have fallen behind with bills.”

3. Shop like you’re in a couple

Being single means you don’t always gain from things like multi-buy offers in the supermarket. “Sometimes, when you buy in smaller portions, you pay more,” says Routledge, who says to make sure you’re signed up to store loyalty cards, and start buying in bulk when you can. “Buy and cook like you are cooking for more than one person, but then freeze half of it,” she advises. “And really plan your shopping. Write a list, because single people tend to waste more food than people in couples. It’s just being really intentional with your spending.”

4. Watch your budget

Knowing exactly what you’ve got coming in and going out, means you can trim the unnecessary stuff. “You can start spotting subscriptions you haven’t used in six months,” says Routledge. “Or realise how much you’re spending on lunch out when you’re at work.” It’ll also highlight “if you really are struggling and if you do need some professional help” she adds. “It’s at that point when you should go and get some debt advice.”

Also consider where you can share the load. Could you carshare? Are there subscriptions or streaming services you could share with a single mate? Or split buy-one-get-one free offers with?

5. Rejig your living arrangements

To help with household bills, you could look into taking on a lodger, if you have a spare room, but don’t feel pressured into it. “That’s a big decision, and something you’d have to weigh up, depending on your particular circumstances,” says Routledge, who notes you can have a lodger and earn up to £7.5k a year, tax free, thanks to the Government’s Rent A Room Scheme.

Alternatively, “you don’t always have to move in with a partner. You could share a house with a family member, if you have a single sibling that you get on well with and you’re going to be able to live together, or a single friend,” says Routledge. “People could consider less traditional household set-ups if they’re in a situation where money is really tight.” You could house-share with a parent, or cousin, and single parents with children could even cohabit, which would help cut babysitting bills too, and provide additional support.