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How will HMRC assess / administer cutting child benefit for higher rate tax payers?

How will HMRC assess / administer cutting child...

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I know the plan is to cut it for higher rate tax payers but does anyone know how this will be done?

e.g. will it be based on previous year's earnings or a declaration in the current year? Will it be done through self assessment or some other mechanism?

Any links welcome.

Many thanks in advance!

Replies (10)

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By ksagroup
06th Jan 2012 10:48

I suspect easily

I suspect that the child benefit has something to do with your national insurance number.  I expect that they can easily link that to your earnings..

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By Andywho is fed up
06th Jan 2012 10:55

Cutting Child Benefit

I'm not sure how this will work.  

Child Benefit is usually paid to the mother.   In most cases (and I know this is not PC), the main earner will be the father and so it will be necessary to link the father's earnings to the mothers CB payment.

Without a formal declaration from the couple, how are DWP and HMRC going to match their records for two separte individuals?

Also, as with tax credits, we seem to be moving back to the days of joint assessment again.


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Replying to Duncan Cameron:
By neiltonks
06th Jan 2012 11:04


It's sort of a joint assessment but not in any sane way. Benefit will be lost if either partner is a higher-rate taxpayer regardless of their joint earnings. So a household where only one parent works but earns £1 above the higher rate threshold will be affected, while a household where both partners work and each earns £1 below the threshold will be unaffected (even though their household income is twice that of the other couple!)  Go figure!

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By ksagroup
06th Jan 2012 11:36

Good point it is really a dogs dinner

I suspect this benefit change will be looked at again as it doesn't come into effect until 2013 I understand.  This loss of benefit is going to hit the cafes in affluent towns I think

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By DMGbus
06th Jan 2012 13:57

Reminds me of "Family Allowance"

Many years ago (in the 1970's I think) there was a politically-engineeered arrangement whereby Family Allowance was paid to mothers and the tax was dealt with via their husband's PAYE code.   The intention was to ensure that the money got spent by the mothers on the children rather than benefited the fathers by reducing their tax deductions.

So, perhaps we're going for a re-run of this!

Longer term, perhaps the forthcoming "universal tax credit" will sort things out (and simplify things too, I hope).




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Euan's picture
By Euan MacLennan
06th Jan 2012 13:59

Not so much a dog's dinner

... as a dog's breakfast!

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By Marion Hayes
06th Jan 2012 22:09

Those were the days

If I remember rightly the coding deductions were calledFAM and FAD.

The hubands code was reduced by 42 - the family allowance for the year and 46 - the family allowance deduction. That was before the days the childtax allowance was incorporated into the combined child benefit of course

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By Carl London
09th Jan 2012 10:07

Thanks all for comments - yes the universal tax credit seems like the most logical choice but let's see!

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By M Shapland
13th Feb 2012 15:05

child benefit

What if they are not parents of child are not married but living together?

How will HMRC know about their income?


I suspect that they are going to launch an application form to for families to complete in order to establish who can claim CB>


What about changes in personal circumstances? Redundancy, Pay rises (we hope) or divorce or separation or even death in year? Will CB be recalcualted?

Is this going to follow the tax credts line and people will need to notify of changes or will they be ignored in the year the change takes place?

How will they recover overpayments?

So many questions, so few answers?

Whoever came up with this stupid policy should be handed his/her P45?

How come those who earn £100,000 or more only loose £1 of their personal allowance for every £2 exceeding the threshold and if they pay enough pension contributions or gift aid they can keep it all.

But the family with only one earner who happens to earn £1 more than the higher rate treshold loose all of the child benefit for that year. This does not make sense.

Lets contact all the employers and offer to renegociate their employees remuneration. How about offering tax free benefits? Increase in Pension contributions paid by employer for salary sacrifice to keep those who are border line below th Higher Rate Threshold..

As Tax adviser I intend to do all I can to advise our clients to ensure that they hang on to their Child Benefit without braking the rules of course.. but again what is going to happen to those who do not have repesentatio???


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By M Shapland
13th Feb 2012 15:30

What about the impact of the loss of child benefit on the mother's entitlement to pension credits for children under 12 years old she looks after?

 Guidance states:"

 What protection does your Child Benefit give you?

Your State Pension is based on the number of 'qualifying years' you build up during your working life. A qualifying year is one when you earn enough to pay National Insurance contributions. So if you're not working, or not earning enough to pay National Insurance contributions, your pension could suffer.

For each week that you get Child Benefit you could qualify for:

weekly National Insurance credits to protect your future entitlement to basic State Pensionweekly Earnings Factor credits to protect your future entitlement to the State Second Pension.

You can combine the weekly credits with National Insurance contributions and credits in order to build up a year of entitlement to the basic State Pension.

Your credits and contributions have to be made in the same tax year for you to combine them in this way. 


Has anyone have thought about this??


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