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Politics

Changes to child benefit -implementation

83 replies

Kangarobber · 13/02/2012 19:09

Could someone please explain to me how the Govt are implementing the removal of child benefit next year from hoseholds where one or more adults earns in the higher tax bracket? Or if the details have not yet been announced, what theoretical scheme they might use for it please?

I claim child benefit and earn less than my personal allowance each year. I also have that home responsibilities thing (can't remember the details). DH earns in the bracket that will be affected. He thinks they will rely on either me stopping claiming it, or I will be able to go on claiming it, but then he will have to declare on his tax return that I claimed it Hmm and it will get clawed back at that point.

Is this possible or even a realistic method for implementing this change? If nott, how will they do it?

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AThingInYourLife · 13/02/2012 19:11

They've said they are going to look at it again because as proposed it is very unfair.

Kangarobber · 13/02/2012 19:12

Well, I thought DC made some sympathetic noise in a speech or when questioned but then the Minister and Dept in charge made it clear there was no review happening...

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CogitoErgoSometimes · 14/02/2012 07:21

I don't think the mechanics have been made clear yet. However, Tax Credits are claimed by having us declare our total household income and other information once a year and I could see a similar form going out to all CB recipients asking them to make a similar income declaration for themselves and any cohabiting partners/spouses. There may be some extra rules included if there is a review but, if they want it to be fairer, they will exclude all those mythical '2 earners on £40k each' rather than engineer it so that more people on middle/high incomes get to keep the payment.

AThingInYourLife · 14/02/2012 08:04

Won't that make a cheap social welfare payment into an expensive administrative nightmare (like tax credits)?

I'm confused as to how something as obvious as two parents on roughly equal salaries either just above or just below the threshold can be dismissed as "mythical".

It's going to create some undesirable incentives.

CogitoErgoSometimes · 14/02/2012 11:51

Obviously a universal payment is cheaper to administer than one that is effectively means tested but, at the same time, if we're not paying upper earners £20/week, that's going to still mean a big saving.

I said 'mythical' because the example gets trotted out all the time and, rather like the families in the DM taking home large amounts of HB because they live in a Belgravia townhouse, they are not going to be in the majority.

If you want undesirable incentives, the tax system is full of them. A couple earning £40k each pay a total of £20,874 in tax and NI between them. A single person earning £80k pays £26,991. That's a much bigger discrepancy than £20/week CB.

EdithWeston · 14/02/2012 11:55

It drives a coach and horses through the principle of independent taxation if one person has to declare what another person receives.

They really need to find a way to back out of this one with losing (even more) face. For the expected savings (from people relinquishing their claim) wilk be totally wiped out by the additional costs of clawback (from those who keep it to secure the NI credit) and in administering changes to those with a variable income.

Northernlurker · 14/02/2012 11:59

I would like to know how the hell the government is going to justify removing a benefit paid to one partner based on the income of the other. The majority of people claiming CB are women. This policy is anti-women - even leaving aside the issue of HRP which I have NEVER seen addressed in any of the statements on this issue. I am now working so HRP is not an issue for me anymore. Having a benefit removed from me because of dh's earnings certainly is though!

CogitoErgoSometimes · 14/02/2012 12:01

The precedent is already set with the declaration for Tax Credits which is based on the gross income for the household. That doesn't seem to have knocked independent taxation for six. My feeling is that they will administer Tax Credits and CB separately for a year or two, take the cost on the chin, and then the whole thing will be swallowed up in the Universal Credit together with HB and other benefits. One all-encompassing declaration rather than the current system should mean a huge reduction in admin long-term

CogitoErgoSometimes · 14/02/2012 12:02

Ditto to Northernlurker. If you receive tax credits now and your partner's income goes up or down then the amount you receive will be affected. You could call that system 'anti women' as well but it would work the same way if the man claimed the credits and the woman was the main wage earner.

EdithWeston · 14/02/2012 12:07

If this were on joint household income, it wouldn't attack the principle of independent taxation (as the adults in the household would be claiming together). As this stands, it does: for it requires one person to declare another's position without their consent.

It would be interesting to see what happened if the HRT's said "I don't know, and have no legal right to be informed" on their tax form when asked if anyone in their household were claiming.

CogitoErgoSometimes · 14/02/2012 12:10

It's unlikely to be administered via a tax form. I would have thought the CB form would ask applicants whether they were single or in a couple and then each to declare their income, separately signed off if necessary. If the applicant says 'couple' and there is an income missing, they'd investigate.

Northernlurker · 14/02/2012 12:11

I think the difference with tax credits is that that replaced a system which was always based on earnings and defined through the taxation of one party - the married couples allowance. The payment of tax allowances/credits has always been related to earnings. The payment of child benefit never has been and indeed was intended as a balancing tool to support families in the face of the sometimes unreasonable behaviour of the main wage earner.

CogitoErgoSometimes · 14/02/2012 12:23

I realise there were historic reasons why CB always went to the mother. These days, women can be a lot more independent than they were when it was introduced, even if some choose not to be. There are still far too many men that behave unreasonably towards women and children and it's obviously wrong. I'm sure there is a way to make sure that women still receive the payment where necessary, but it doesn't seem right that we design a benefits system around a badly-behaved minority.

EdithWeston · 14/02/2012 12:30

CES - good! If not being clawed back from the HRT (as early announcements said it would be), then have they actually announced their new thinking on this (and the NI element?). Grateful for any links (as have clearly missed this change totally!)

CogitoErgoSometimes · 14/02/2012 12:50

I've not seen any announcements, sorry. Purely my own speculation. :) It all depends on whether HMRC would prefer to deal with it via everyone's tax codes and a system of claw-backs or whether they would staple the CB admin to the Tax Credit calculations. If HMRC are going to stay in the business of handing out cash payments it seems to make more sense to deal with CB the way they deal with Tax Credits than to use the PAYE system which is already very complicated and much more geared up for collection.

EdithWeston · 14/02/2012 12:57

from Institue for Fiscal Studies: "The Government intends to claw back the amount of child benefit paid to a family from higher-rate taxpayers through the income tax system. Higher-rate taxpayers who receive child benefit, or whose partner receives child benefit, will have to make additional payments through income tax self-assessment equal to the amount of child benefit they receive".

I've not seen anything to contradict this.

Nor anything definitive on the NI credit.

Very badly done, really. It doesn't show administrative competence, which means that one cannot assume anything is being done competently at present,

CogitoErgoSometimes · 14/02/2012 13:14

Sounds like they're treating CB as a kind of taxable allowance in that case. I suppose another box on the self-assessment form isn't the end of the world but not everyone completes a self-assessment, of course. So it will have to be docked from the tax-code rather in the way a company car is - and that relies on individuals advising HMRC that they are parents which could be the weak link.

Kangarobber · 14/02/2012 14:28

OK, so doing it through a claim form (like CES suggests) won't have any impact on us. I already claimed for my 3 children when they were born (and will be claiming for number 4 in Aug). You fill in the form once and it's paid thereafter. I guess they could write to me and ask me how much dh earns, but that would assume I know, which I do not exactly, I only know that he's said this change will affect us. Obviously he would tell me if I asked, but hypoethtically how would I compel him to if he refused? What if his income changes mid-year, e.g. if he gets made redundant (not a hypothetical risk!)? How would I re-start claiming and prove the change?

I am certainly not going to write to them and ask them to stop paying us. I guess from Jan we will have to somehow save the money up in case it needs to go back when tax returns are done Confused.

Dh and I don't lie to each other, and certainly not to HMRC, but what if someone lied to their DH and said they'd stopped claiming, or if the DH was unaware she ever claimed (I know of one couple where this is true). The DH would then unknowingly make a false declaration on their tax return, but if questioned the DW could say she didn't know the DH's income. So who exactly would have committed fraud?

Can someone explain more about amalgamting it with tax credits. We don't get those, so I have no idea how that works. Unless they're going to stop everyone's child benefit and make everyone re-claim afresh then I struggle to see how they will switch to some sort of annual form-filling, as CB is a one-off claim and so many already receive it.

I just don't understand how this can work. It sounds like even administering this 'simple' proposed change with no tapering or means testing could be v expensive.

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CogitoErgoSometimes · 14/02/2012 15:28

"So who exactly would have committed fraud?"

When declaring income or unearned income for tax the responsibility is on the person paying the tax to make an honest declaration within reason. If you're allocated a company car and don't declare it because you think your payroll department told HMRC it's not your fault but you should expect a bill for back payments when they find out. Similarly, if one parent lies about claiming CB and the HRT payer doesn't declare themselves as a parent, the HRT payer will be held responsible.

Amalgamating with tax credits is only my suggestion. Up until last year, households with an income of up to £50k-ish could claim CTCs. It involved one annual declaration and not even that if the details hadn't changed. It wouldn't be unreasonable to send all families a combined Tax Credit/Child Benefit form, ask for the household income to be declared per person rather than as a combined figure, and take it from there.

scaryteacher · 14/02/2012 18:22

'It would be interesting to see what happened if the HRT's said "I don't know, and have no legal right to be informed" on their tax form when asked if anyone in their household were claiming'

That's what I'm going to do when asked the question - or alternatively - do you have an HRT in your household, I will say that I don't know....

Dh doesn't receive the cb, I do, so how can they make him pay for what is a benefit to me, when I don't work because we are posted overseas on govt service?

Iggly · 14/02/2012 18:29

Given that HMRC don't cross check earnings via tax paid and tax credits, I don't see how they'll be sure to catch all HR households and stop CB.

Many HR taxpayers don't have to complete a self assessment form so it'll be more paperwork.

Madness. They should have left well alone.

scaryteacher · 14/02/2012 21:10

Iirc, if you are HRT under £100k with straightforward PAYE, you are not required to complete an ITR. We only do them because we have income from lettings.

Kangarobber · 14/02/2012 22:23

DH only does a tax return because he earns extra from additional work above his salaried job. Unless he's hiding an awful lot from me his income's nowhere hear 100k (alas)!

I am glad this thread has prompted me to look up the home responsibilities protection and the thing that's replaced it, though I'm not sure I fully understand the changes. Given that I'll have a child under 12 for over the next decade, I'll be a bit pissed off if my state pension entitlement at retirement suffers because of DH's income. As I am both self-employed and have low earnings this is v relevant to me. Whilst I hope it will be an irrelevance for us, it would be a bit of an assumption given the divorce rate for the Govt to presume that all women in my position wouldn't need this when they come to retire -which for me is over 30 years from now.

I don't find this statement particularly reassuring:

"The government recently announced changes to who can claim Child Benefit. The full implications of the change, including how to make sure that those affected continue to receive credits towards their State Pension, are being considered. Further information will become available in due course."

As with the changes to CB, my main question remains HOW?!

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Kangarobber · 14/02/2012 23:13

DH has pointed out it would be much more straightforward to simply stop HRT payers claiming CB rather than faffing about household income, asa all they would need to do is cross-reference the NI numbers. However, single parents would still be screwed, only they would then be the only ones losing out Sad Angry. Also, presumably the savings would be nowhere near as great as intended, as it would put the household threshold squarely at 2x the higher tax threshold, with the exception of single parents.

I went back and looked at what Osborne said in relation to Cameron's commetns that the implementation was being looked at, and did think it interesting that the figures he chose to mention were 80-100K, not £42K. A hint that this could be where it ends up maybe?

"We haven't set out how we're going to implement that and we're going to do that in the next few months.

"But the principle that it's not fair to ask someone who's earning say £20- or 25,000 to pay for someone who's on £80- or £100,000 to get child benefit is one that I think is very important."

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scaryteacher · 15/02/2012 08:16

That last sentence was what pissed me off. Given the amount of tax dh pays, HE is paying for the CB not only for us, but for others as well, unless George Osborne thinks that somehow HRTs aren't paying tax.

Kanga - under the Data Protection Act, which also has to be involved here, how can they cross reference NINOs, if there is no claim other than for CB?

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