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image of panel from budget part 1 | accountingweb | Benneyworth scathes at HIBIC in FAB Budget panel
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Benneyworth lambasts HICBC in FAB Budget panel

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At the first of two panel discussions on the Budget, Rebecca Benneyworth expressed her disdain for the high-income child benefit charge, while other topics included NI cuts, helping the poor, and AI.

13th Mar 2024
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Day one, session two on the Any Answers stage at the Festival of Accounting & Bookkeeping was a busy one. With big hitters such as Rebecca Benneyworth, Sharon Cooke, Emma Rawson and our own consulting tax editor Amy Chin on the panel, “Spring Budget: The AccountingWEB Review Pt 1” was always going to be popular. It was so popular in fact that when all the chairs had been taken, some chose to sit at the front of the stage to get a front-row seat.

It was a fast-paced session with much ground to cover – the focus being on high-income child benefit charge (HICBC) and why changes to the thresholds haven’t solved the problem, why national insurance (NI) was cut and not income tax, as well as touching on AI.

Disdain for HICBIC

Kicking off with HICBIC, Benneyworth shared her long-held disdain for HIBIC.

She said: “I still feel that a complex provision like this, where the taxpayer has to drive it and what I mean by that is, people have to go, ‘Ooh, there's a thing. Oh, I’ve got to tell HMRC I need to have a tax return and pay some tax.’ I said at the start it was never going to work and I was blinking right.”

She added: “I think it’s nonsense. And it undermines faith in the tax system because people, through no fault of their own, are getting massive bills feeling really aggrieved. So I still feel very strongly about that.”

Benneyworth made the point that when HICBIC was introduced 11 years ago, the £50,000 threshold was reasonable. While the adjustment to £60,000 made in the Budget is an improvement, if the increase was indexed, the lower end of the threshold should actually sit at around £65,000, although she did welcome the doubling of the taper from £10,000 to £20,000.

Household income

She was very clear that the idea of calculating child benefit based on household income is “insane”.

“What about couples who don’t tell each other what they earn? How are they going to know, and who will pay it anyway? Will it still be the high earner? We already eroded financial confidentiality when we brought [HICBIC] in and said the higher owner pays for it.”

The solution? Benneyworth says adding child benefit to overall income and making the whole amount taxable, would not be an option for the government because it would not generate enough revenue. The alternative is to scrap it and make it part of the benefits system, applied for through the Department for Work and Pensions (DWP), but again Benneyworth said that probably wouldn’t happen either because, in the words of one minister she spoke to it would be “too expensive”.

Rawson suggested that those with clients who have not claimed because they earn between £50,000 and £60,000, or are claiming but not taking the money so they can get the NI stamps, should think about waiting until after April and then backdate claiming if they are in the higher bands and between £60–80,000.

Self-employment and AI

No panel discussion is complete without a mention of artificial intelligence (AI) these days. With one eye on the future, the panel highlighted how one Budget announcement that some might have missed was an update in the guidance on whether self-employed people can claim tax deductions for expenses that occur in upskilling to remain relevant as AI and technology is doing more.

Rawson said: “But we still don’t have a level playing field. It’s still much easier to get tax deductions for training employees than it is for self-employed individuals.”

NI cut

The 2% cut in NI was also up for discussion, and specifically why there was a second NI cut just a few months after the Autumn Statement, and not a cut in income tax.

“Part of the answer is that reducing income tax is pretty expensive. So taking 1p off income tax is about £7bn,” said Rawson. This compares to the £4.5bn cost for every 1p cut in NI.

She added that we might see further cuts in NI, whittling it away to the point where it doesn’t exist anymore, instead of increasing income tax.

Benneyworth added: “NICs are cut but only on the £50,000. The 2% is still there. And that will be the big challenge – if the Chancellor whittles it down a bit more, I think it’d be very, very hard to get rid of that 2%.”

Help the poorest

One question from the floor was how to help the poorest people in the UK, through the tax system. Rawson said the best way to help was not through the tax system at all.

“The very poorest in society don’t benefit from tax and NICs”, she said, while Cooke said the obvious place to start would be to address fiscal drag.

Benneyworth said: “I’d do it through the benefits system. The Treasury clutter up the tax system when it should be more straightforward. There is a trade-off with simplification because you lose a lot of little twiddly bits to help this person or to help that person, but I’m a simplification-first person.”

Part 2 tomorrow, with the same panel guests plus Paul Aplin, will hone in on raising standards in the tax advice market, capital gains tax (CGT), furnished holiday lets and multiple dwellings relief.

Replies (14)

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By FactChecker
13th Mar 2024 20:03

“Part of the answer is that putting up income tax is pretty expensive. So taking about one pence of income tax is about £7m,” said Rawson.

I presume that Rawson is being mis-quoted there?
First, the expensive option is reducing (not putting up) income tax ... and, I'm no econometrician but, I'm fairly sure that 1p of IT equates in total to nearer £7bn than £7m?

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Replying to FactChecker:
Joanne Birtwistle
By Joanne Birtwistle
14th Mar 2024 07:57

You are right - corrected, with thanks.

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Replying to Joanne Birtwistle:
RLI
By lionofludesch
14th Mar 2024 10:41

"One pence"?

[sigh]

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Replying to lionofludesch:
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By Paul Crowley
14th Mar 2024 18:11

If only currency words were in the Aweb style guide

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Replying to Paul Crowley:
RLI
By lionofludesch
14th Mar 2024 18:15

It's literally written on the coin.

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By NotAnAccountant2
14th Mar 2024 07:48

Benneyworth added: “NICs are cut but only on the £50,000. The 2% is still there. And that will be the big challenge – if the Chancellor whittles it down a bit more, I think it’d be very, very hard to get rid of that 2%.”

Assuming it ever gets to that point, don't you just merge the remaining NI into IT? With a bit of extra tax from pensioners and landlords into the bargain. Just call it simplification.

But I don't think it will ever get there. I think there's been about 5-6% of NI cuts since BJ announced his 1.5% for the NHS...!? They're going to have to be reversed regardless of who wins the next election. Although if I were in charge I'd "reverse" it by putting 5% on all the IT bands instead of back on NI. I'm not trying to get elected though...

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By Open all hours
14th Mar 2024 08:23

Fully agree with RB re HICBIC. Many phrases sound so familiar. ‘A complex provision’ ‘It was never going to work’ ‘Nonsense’ ‘Undermines faith in the tax system’ carry straight across to MTD and show the tin eared attitude HMRC have to so many of our concerns. How will we ever get through to them?

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By petestar1969
18th Mar 2024 11:49

The HICBC should be scrapped altogether along with the current form of child benefit.

Instead, give parents an enhanced personal allowance until the sprog gets to 18.

Only those that don't benefit from that option would be able to claim child benefit in some form.

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By rmillaree
18th Mar 2024 12:25

i have no idea why Rebecca keeps banging on about her same biased viewpoint here

"She was very clear that the idea of calculating child benefit based on household income is “insane”."

practicably speaking its a means tested benefit benefit that people have to be grown up enough to take responsibility for this fact if they choose to claim. compared to the hassles of filling out tax credits claims and universal credit people having to take resposibility here "if they want to claim". Ref using joint income isnt a biggie - more complex yes - but for other people who subsidise this giveaway seems perfectly sensible.

i am not overly fussed whatever happens here but it seems like we are treating these people who have the hassle of taking redsponsibility as 5 year old kids who want an ice cream 5 minutes after thye have jus thad an ice cream. The fact they have raised thresholds and there is no easy solution and we still moan and groan despite the increases - oh dear.

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Replying to rmillaree:
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By raybackler
18th Mar 2024 19:59

One of the most fundamental basics in our tax system is self assessment. The good old days of tax benefits for married couples have mostly long gone. The introduction of HICBC and the marriage allowance have bitten into this concept.

The self assessment system should be exactly that. You shouldn't have to rely on others disclosing their total income to you, so you can make a correct return. It is different with marriage allowance where both parties have to agree the allowance transfer. It is also different where both parties are joint owners of a buy to let. Here the ownership decision is made by both parties in advance.

HICBC is a different matter entirely where there is no advance agreement between the parties. They can get swept up in tax problems without the faintest idea they are breaking the law.

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Replying to raybackler:
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By rmillaree
18th Mar 2024 20:32

i do concede the situation is not exactly ideal - however facts are we are talking about people with joint household income who are practicably speaking claiming means tested benefits - if they want to claim the benefit they have to be grown up enough to take the rules that go along with the situation - no one seemed to bat an eyelid when people had to declare joint income fot tax credit purposes. So ignore the fact the mechanism for repaying is via sa and there would be no bi tching - the fact the repayment part repayment is fairly simply sorted by filing sa return when ye income is known seems to throw people into mass tizzy on some moral level that is all out of proportion to the reality that its means tested benefit and rules are rules.

" there is no advance agreement between the parties"

they live together as one household and clearly have inter dependent finanaces - asking them to act as unit ref the whole claim process aint too much - if anyone who doubts the probity of their partner then their is the official route to check. Why should this means tested benefit be different to all the rest that depend on income of both parties combined - i simply dont get the fuss.

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Replying to rmillaree:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
19th Mar 2024 16:44

Child Benefit (previously Family Allowance) has never been a means tested benefit until HICBC was introduced in January 2011. It was not in reality “claimed” - once the birth was registered it was paid - normally to mum. It used to be paid in the same way as pensions - by taking a booklet to the post office and surrendering a ‘docket’ each week in return for payment. It was one of the few important universal benefits - enhanced when the additional personal tax allowance for each child was removed.

My point is (and not biased - just from 40 years experience) that it is either a universal benefit or if it is not it should go into the benefit system to be claimed. And claiming such benefits requires (as you say) financial transparency within a household. But to put HICBC into the TAX system undermines personal control / confidentiality within the tax system - which I suffered when I started my practice in 1984 and could not engage with the Inland Revenue in relation to my own tax affairs because I was regarded as an adjunct of my (then student) husband.
There are plenty of couples who prefer to keep their financial affairs private from their spouse - and that is their right. Creating tax measures (HICBC now and in the proposed future) that undermine that is a backwards step. HMRC does not have information on household income, it would be practically difficult to collect this (given frequent changes in the composition of households) and that means that compliance work (checking that people pay the right tax) will be difficult and expensive. DWP does have household income so maybe it’s time to end “(notionally) universal” child benefit and wrap it into the benefits system. Lots of median income parents might lose out - or alternatively if the thresholds were more forgiving might flood the DWP with claims, but honestly this is not a sustainable way forward for recipients or HMRC.

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Replying to RebeccaBenneyworth:
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By rmillaree
19th Mar 2024 17:14

the issue here is that practicably speaking it is a means tested benefit in everything but name and that being the case other ways for paying back are not obviously better thats pretty clear

surely you must concede that with many other aspects household income is important and needs to be declared without moaning - so no idea why child benefit should be such a bugbear just because its the tax return doing the collecting. No one earning over 50k is forced to claim - and if they must repay due to other household member claiming - well thats how means testing couples works.
Benefit claimants should be thankful for the benefits they get and do everything they can to enure they act in diligent and responsible manner ref claims made. The moaning when changes dont suit them or collection is via form they dont like is poor form imho - its a benefit if you need to pay back via whatever method get that done.

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By RogerMT
19th Mar 2024 11:11

I do wonder why any household with a combined income of £50K+ actually needs Child Benefit. In principal, but not in practice, like a lot of things, HICBC is right. However, ultimately it should be means tested, rather than a convoluted and cumbersome tax introduced at the top end. The cut off should be £40K max.

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