Child Benefits – the son of Tax Credits | AccountingWEB

Child Benefits – the son of Tax Credits

I have often bemoaned the fact that the Government (HMRC) consults on some relatively minor issues and fails to consult on major issues such as the introduction of Tax Credits and its impending replacement Universal Credit. The proposals regarding Child Benefit (CHB) are a classic example.

The TC repayment fiasco caused numerous problems, but at least both members of a claimant couple would have submitted a joint application for the Tax Credits in the first place. This won’t be the case for CHB. Take a typical scenario – mother is the recipient of CHB and her partner is the main earner. The partner (I’m assuming he’s a male, he might not be the father) has no involvement with the CHB claim. The CHB claim would have been made by the mother at the time each child was born. The partner would have had no involvement with the claim – he might not have been on the scene at the time.

So what happens if the mother is reluctant to supply her partner with CHB details? What happens if the mother and partner have split up by the time the partner completes his 2013 Tax Return? He may never have had any involvement with the CHB claim, he never signed the original application, he never received any money, he has no idea whether the mother received any CHB or not because she considered it her business for her children. So how is the partner to obtain the information to complete the 2013 Tax Return? HMRC won’t tell the partner because it was the mother who was the claimant and HMRC aren’t authorised to divulge information to anyone else. And why should the partner be liable to repay CHB that he never claimed and never received?

But it gets worse. TC claimants supply their CHB claim number as part of their TC claim. So the Tax Credit Office could match up partners for each CHB claimant. This was the case until last year when HMRC stopped paying the family element of TCs to couples with combined income in excess of £50k. Then in 2011 and again last month the Tax Credit Office issued letters to all TC claimants who didn’t receive payments telling them their claims will cease if they don’t take any action. So HMRC has actively removed details from their files of many of the couples they will now need to target. So how are HMRC going to gather the data? Most of the effected individuals will be taxed through PAYE and not currently required to complete Tax Returns. Are HMRC going to contact all current CHB claimants and ask for income or NI details of their partners?

The whole thing is a mess. And what for? We’re typically talking of about £1752 for two children. Based on current average earnings only a small proportion of claimants will have to repay some or all of the CHB. HMRC could well spend more in administration trying to identify these couples than they will raise in the claw back.

Has anyone got any clearer idea how this is going to work in practice?

There are 18 comments. Login or register to view them.

Similarly concerned

Helen Crowley |

A useful summary

cbp99 |

excellent summary

listerramjet |
listerramjet's picture

Not to mention effective tax rate anomoly

Stephen Dempster |

General query on child benefit

michaelhudson |

The CHB cut off was so that everyone could make

pauljohnston |

simple answer

Tom 7000 |
Tom 7000's picture


Swedish Chef |
Swedish Chef's picture

HMRC learn from mistakes ?

The Black Knight |

January 2013

jfrowe |


kevinringer |
kevinringer's picture

Choose not to claim and still complete claims at the same time !

kevinringer |
kevinringer's picture


The Black Knight |

first directive

The Black Knight |


tonimatthews1 |

I agree for the future only pay child benefit for the first two

pauljohnston |

All very well saying only pay

Jane S-D |

Good point jane

pauljohnston |