In a written Parliamentary Statement, the Financial Secretary to the Treasury, Victoria Atkins MP, has said “The government wants to simplify the process for customers who become liable to the High Income Child Benefit Charge, particularly for those who currently need to register for Self Assessment to pay the charge. The government will provide details in due course on how it will enable employed customers to pay through their tax code, without the need to register for Self Assessment.”
Commenting on today’s news, Shaun Moore, tax and financial planning expert at Quilter said:
“The move to take the onus away from higher earners having to remember to pay back part or all of their child benefit are welcome, but does not get away from the fact that the high income child benefit charge is in need of wholesale reform anyway. By clawing back the tax charge via people’s tax codes, instead of having to remember to do a self-assessment, we should see far fewer people inadvertently fail to pay the charge, and also will help simplify the tax affairs of those affected.
“However, this will still be complex for people to implement and those impacted will need to make sure their tax code is correct. If it isn’t, then they once again have to take on the burden of getting it fixed. This, ultimately, is just tinkering round the edges of what is a perverse charge. Currently, basic rate tax payers are impacted by this charge, an intentional policy that is designed to raise as much as it possibly can without appearing unfair. Furthermore, single income households are at greater risk of paying the charge, penalising hard working single parents.
“The government needs to go much further here. If it had moved in line with inflation, the £50,000 threshold set in 2013 would be over £65,000 today.
“There are ways to lower your tax bill and ensure you don’t get hit by the charge. For example, making additional pension contributions can lower your overall income and mean you don’t hit the £50,000 threshold. Clearly, this won’t be right for everyone, but it is an option should you wish to reduce or avoid the charge.”
And there’s more…
As well as Quilter’s Shaun Moore, LCP’s Steve Webb has also been sharing his reaction to today’s news about the High Income Child Benefit charge, which he says is ‘just ten years too late’.
