I’m never really sure why the media suddenly latch onto a story in a rather herd-like mentality. The Government planned and announced changes to child benefit some months ago, in October 2010, yet today the media is awash with this information and the basic gripe that it is possible that a couple both earning just under the higher rate tax threshold will continue to receive the benefit, whereas a family with one earner, perhaps just breaching the higher rate tax threshold will see their child benefit stopped.

One would like to think that this was an easy process, after all, in order to claim child benefit claimants need to record their details accurately, including information about their partner and need to provide national insurance numbers – which are unique to each person and directly link to HMRC data about income. However, the new rules, do seem to be somewhat unfair on families that have lower combined income, but where one partner earns enough to pay higher rate tax – even if this is a very small element of actual income.

The Treasury spend £12bn a year on child benefit and these proposals are expected to save £1bn. The changes were scheduled to come into effect by 2013 however the anomaly of a couple earning £80,000 and being able to claim child benefit against a couple earning £45,000 and not being able to do so has made the possibility of an easy solution less workable. The Chancellor has a Budget on 21st March, so now has a few weeks to get his think-tank working on a solution.

As mentioned before, it is possible for some people to reduce their taxable income below the higher rate level by making charitable gifts or pension contributions.

 

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