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Government reforms to the child benefit system could be too complex to implement, a tax body has warned. Under proposals put forward by the government, families with a higher-rate taxpayer would lose their child benefit.
But the Low Incomes Tax Reform Group (LITRG), part of the Chartered Institute of Taxation, has said that the new proposals will be hugely complex. The government first announced the proposal at the Conservative Party conference in October 2010, with plans to implement the new system by 2013. No details of how the proposals would be implemented were given back in 2010, and the government has been struggling with how best to bring in the changes ever since. Currently, claimants receive £20.03 per week for their first child, and £13.40 for each subsequent child. The new proposals have been deemed unfair for immediately withdrawing this money should a parent or their partner become a high-rate taxpayer. “Even if the government solves the potential unfairness of withdrawing child benefit from a claimant immediately if he, she, or his or her partner or spouse, becomes a higher rate taxpayer, that will still leave a host of administrative problems to resolve,” the LITRG told the BBC. The proposals have also been criticised for leading to a situation where one household with one person earning just over the higher-tax threshold would lose the benefits, while a household with two people earning just below the threshold would keep them. But the LITRG has argued that the proposal will be incredibly hard to implement because child benefits operate separately from the tax system. It also points out that there is no definition of ‘household’ in tax law, and that it is impossible to know who is a higher-rate taxpayer until income for a whole tax year has been assessed. If you have a child, it is a good idea to take out life insurance to ensure that your family will be protected should something happen. You can compare life insurance policies with Money Expert.
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