The coalition's child benefit reforms come into force today.
Under the new system, any family where one earner takes home more than £60,000 a year will lose all of their benefit. Once the household's highest earner takes home more than £50,000 a year, they begin to lose part of the benefit for every extra pound they earn.
Despite assurances that the new system is bedding in smoothly, not all are convinced. The Institute of Economic Affairs said the Coalition’s child benefit reforms are “the single most incompetent change to the benefits system since the Second World War”.
It is estimated that around 1.1 million earning more than £50,000 a year are set to lose some or all of their child benefit payments. However, the Telegraph reports that only 250,000 people had voluntarily opted out of the child benefit system by 5pm yesterday, with just seven hours to go before the deadline for registration. This leaves around 850,000 parents who will continue to receive their child benefit as usual but have it clawed back later in tax through the self-assessment process.
Hardly an efficient process, and one that will burden both the families and HMRC.
I wonder if anyone warned the coalition that this was not such a great idea?
Oh wait, I did warn about this in October 2010:
"This absurd "Heath Robinson" claw back will increase the complexity of individuals' tax affairs, and add to the burden on the already overstretched HMRC."Also again in May 2012:
"It is disappointing that Osborne is going ahead with this oncoming clusterfuck."I dare say that my cynicism and pessimism are misplaced though, as Lin Homer was on the radio this morning assuring us that everything is tickedy boo with child benefit. In fact she went on to defend government policy (I thought civil servants were meant to be impartil?):
"..most families don't need child benefit.."So that's OK then!
Tax does have to be taxing.
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Being "assured" by a person with Homer's track record is akin to obtaining satisfaction to Tony Blair's statements in relation to WMD!
ReplyDeleteThe best thing is that Homer has any faith in HMRC systems presenting accurate facts. LOL
What next, call centre problems are the fault of the customers for ringing at the wrong time?
The worst piece of legislative gerrymandering I have seen in the tax and benefit system in my life time (and I have been in the tax business both with and outside the Revenue for over 30 years). It has quite rightly been torn to pieces by the IFS.
ReplyDeletehttp://www.ifs.org.uk/publications/6527
Essentially it has created a special tax rate for one group of people earning in excess of £50,000 while taxing the rest of those earning over £50,000 at an entirely different rate. It violates the central principle of the current tax system that individuals are taxed on their personal income by potentially making one party liable to pay tax on Child benefit income that may be paid to another person in the partnership. Because the clawback rate varies with the number of children in the household it is far too complicated to code straight into PAYE so will have to be calculated via Self Assessment this requiring 500,000 people to file this type of return.
If the government want to means test Child Benefit then they should do it the same way as they do with all other benefits of that nature by using total household income for both partners. Alternatively they could limit it to a certain number of children in the family or they could simply treat it as taxable income and assess on the person who actually receives it. Instead they have come up with this abomination which violates all principles of equitable liability and natural justice. The politicians and civil servants defending this farce should hang their heads in shame
I would bet good money that Excom and above did the bidding of their political masters without complaint (don't want to feck up the chance of a bonus or a gong do we - BTW, where bonuses are no longer available per salary, they promote, in-house, or otherwise, and that boosts the pension remeber!).
ReplyDeleteOf course its all down to the Emperor's New Clothes syndrome, Pacesetter, Common Porpoises, Lean or whatever else is being swallowed this year.
Nobody appears to have questionned the number of Dictatorships, oops, Freudian Slip, meant directorships, that have arisen in HMRC, one wonders why?
Until M Hodge & Co. have a concerted and close look at these lawbreakers then "customers" money will pour down the sewer along with the ethics and morals of a stinking dungheap.
Go and ask the staff FFS! They don't have that much to fear any longer as they know their jobs are no longer secure. Don't forget most people accepted civil service pay in exchange for a reasonable amount of job security and a pension. The greedy bastards that fucked up private pensions are responsible for that mess, not the public sector.
Sheeples have such short memories.
"I would bet good money that Excom and above did the bidding of their political masters without complaint"
DeleteErm..........that IS what the civil service is MEANT to do dontcha know.
Oh, you mean The Emperor's New Clothes syndrome?
DeleteJFDI, even when it is patently obvious it ain't gonna work and will waste more taxpayers money.
You would make a grand Excom Champion or Pacesetter Evangelista!
There We Are Then!!
Just a thought, but where are they going to put all these "extra" thousands of staff that they are recruiting?
ReplyDeleteAlong with all the offices closing, there has been all that equipment thrown into skips along with the furniture.
Even if it is true that they will be recruiting these staff, the additional costs will be huge - I.T. don't come cheap on a PFI "contract".
Of course, when the taxpayer foots the bill politicians and managers dont have to worry, do they?
Thousands of affected people will bury their heads in the sand and not register for SA or elect to have their Child Benefit stopped. Anyone out there know what compliance efforts will be made?
ReplyDeleteThis is a grossly unfair system anyway, as it penalises the one wage earner household. The unfairness will be compounded if those people who don't comply voluntarily escape the clawback. For info I would have no problem with the clawback if it was based on household income.
Awwwwwwww.........its not fair.
DeleteAll those cleaners out of work, all those riding lessons forgone...............awwwwwwwwww.........its not fair.....
You are clearly a complete idiot.
DeleteIf you represent the current quality of HMRC staff then now wonder they are so screwed as you clearly have not got the faintest idea of a how a functioning tax or benefit system should work
The treatment of Child Benefit is not only not fair but it is gross violation of the principle that tax rates should rise with personal income at the same rate for all people. We know have a situation where a single income household with two children where a person earns £50000 plus £1752 pa Child Benefit gets taxed at a marginal rate of over 50% or higher while another individual without children earning £51752 pays tax at a marginal rate of 40%. This is without taking into account the fact that the person being taxed may not necessarily be the person receiving the income (a very dangerous precedent which all other taxpayers should note). To make matters worse it is the person receiving the Child Benefit who must decide if they want to opt out not the person liable for the tax. It is therefore quite possible that one partner might decide to keep the Child Benefit but not tell the other who then might not realise that they have to complete a self assessment return thus ending up with both a tax liabilty and penalties for failing to submit a return. Because of privacy laws the individual who has to pay the tax has no right to the information about whether his partner gets Child Benefit and the Revenue would be potentially violating the Data Protection Act and the European Convention on Human Rights if they released it.
Given that the Revenue already assess the Child element of Tax Credits on household income the government should have used the same criteria for Child Benefit. The reason they chose not to do so was because this would require all Child Benefit recipients to go through a means tested claim and that would be administratively expensive. Instead they came up with this bodge which basically dumped the admin burden for sorting it out on the poor bloody individual taxpayer
"If you represent the current quality of HMRC staff then now wonder they are so screwed as you clearly have not got the faintest idea of a how a functioning tax or benefit system should work"
DeleteROFL. And all this is the fault of HMRC.......how?
Waaaaaah - it's not fair.........
Repetition does not make you any less of a tool.
DeleteIf you have not got anything constructive to say I suggest you STFU
Waaaaaaaaahhhhhh - its not fair...........
DeleteYep, a totally predictable and first class clusterfuck, paid for by guess who?!
ReplyDelete