ICAEW Slams Government Over Child Benefit Changes

Monday, May 14, 2012 Print Email

The government’s proposed shake up of child benefit payments – scheduled to kick in in January 2013 – has been slammed by the ICAEW.

Under the legislation, families with one parent earning over £50,000 a year will no longer be able to claim the total amount of child benefit.

In a report sent to MPs and Treasury ministers, it says the legislation is ‘seriously flawed in principle and in practice’.

‘Unless the government withdraws this clause and schedule with a view to tabling a more workable alternative in time for the Bill’s third reading,’ it continues, ‘we believe the new tax charge could be an operational and reputational disaster for the government and HMRC.

‘HMRC will be using the tax system to claw back from one individual a benefit paid to another’, the report continued. ‘The tax system is based on individuals, while the benefits system is based on households. This undermines the principle of individual taxation.’ The ICAEW went on to state that families in similar financial situations could be treated differently, undermining the policy’s ‘fairness’ objective, and creating ‘very high marginal rates of tax for some’.

It has come up with a long list of further issues created by the current plans, ranging from fears that taxpayers could have their confidentiality breached through to PAYE coding adjustments leading to delays of up to 3 years.

The changes are set to reduce the entitlement of more than a million families.

Currently, a parent can claim £20.30 a week in child benefit for an eldest or only child and £13.40 a week for each of their other children. It is administered by HMRC and pays out to around 8m families, with 13.7m children.

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