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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