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Fine threats over child benefit | Fine threats over child benefit |
(about 3 hours later) | |
Higher rate taxpayers could be fined if they fail to declare they have a partner receiving child benefit, when cuts are introduced in 2013. | |
The Treasury has confirmed that "penalties" would be issued in cases of non-disclosure of earnings. | The Treasury has confirmed that "penalties" would be issued in cases of non-disclosure of earnings. |
It follows reports that Treasury sources have said a plan to stop child benefit payments to couples with one higher rate taxpayer is unenforceable. | |
Chief Secretary to the Treasury Danny Alexander said that was "nonsense". | |
Chancellor George Osborne announced plans to withdraw child benefit - currently paid to all mothers until their child reaches 19 - from couples with at least one higher rate taxpayer from 2013, with the aim of saving £2.5bn by 2014-15. | |
'Completely enforceable' | |
But there have been questions over how it will be enforced, as mothers, to whom child benefit is paid, are currently under no obligation to declare it. | |
The Wall Street Journal reported that a Treasury source had said it was unenforceable and elsewhere in government it was felt the policy, due to come into force in 2013, would eventually be dropped. | |
Asked about the story in the Commons on Thursday, Mr Alexander said: "This is a nonsense story, it is completely enforceable, it will be introduced as planned." | |
It has emerged that the government plans to write to all four million higher rate tax payers asking them whether they or their partner get child benefit. Those who do not respond, or do not tell the truth, could be fined. | |
The Treasury says legislation will be brought forward to implement the change but there are suggestions it could result in a much more complex and intrusive tax and benefit system. | |
John Whiting, of the Chartered Institute of Taxation, told the BBC: "You have to compare it to the tax credits system where there are lots of forms to fill in, there's lots of checking up - you have really to put a lot of effort in to get it and make sure you are getting the right amount. You are really grafting that onto a system which, until now, has been beautiful in its simplicity." | |
And Conservative MP, Iain Liddell Grainger, who chairs the All Party Parliamentary Group on taxation, said he had concerns the current taxation system would struggle to cope with the change. | |
"We can bring it in, there's no doubt. But, will we put the confidence into the citizen that what information is held by the Revenue is right ... can be used and, finally and most importantly, is it going to leave people in a financially worse position if they get it wrong, and lose confidence in the whole system? I think the answer could well be yes." | |
The policy has proved controversial. It means a couple with one higher rate taxpayer - currently paid a salary of more than about £44,000 but due to fall closer to £42,000 by 2013 - would lose the benefit but a couple with two basic rate taxpayers collectively earning about £80,000 a year would keep it. Some Conservative MPs have raised concerns it will particularly hit couples where one parent stays at home to look after the children. | |
Shadow Chancellor Alan Johnson said: "The government has added incompetence to unfairness in their eagerness to cut child benefit. We already knew their plan to hit middle earners was unfair, now we're told it is also unenforceable. If they know how they are going to make it work they should tell us what it is, or drop a policy which hits a family on £45,000 but continues to reward a family that earns £85,000." | |
Note: higher rate tax begins after earning £43,875 (£37,400 + personal allowance of £6,475) | Note: higher rate tax begins after earning £43,875 (£37,400 + personal allowance of £6,475) |
Source: HMRC | Source: HMRC |
Do you think the government's plan is workable? Are you a higher rate taxpayer? What do you think of the plan to fine those over non-disclosure? You can send us your views using the form below. | Do you think the government's plan is workable? Are you a higher rate taxpayer? What do you think of the plan to fine those over non-disclosure? You can send us your views using the form below. |
At no time should you endanger yourself or others, take any unnecessary risks or infringe any laws.In most cases a selection of your comments will be published, displaying your name as you provide it and location unless you state otherwise. But your contact details will never be published. | At no time should you endanger yourself or others, take any unnecessary risks or infringe any laws.In most cases a selection of your comments will be published, displaying your name as you provide it and location unless you state otherwise. But your contact details will never be published. |