30/10/2012
Child Benefit Changes, October 2012
Women Liberal Democrats (WLD) are saddened that the universal nature of child benefit has now been removed.
This benefit is a combination of the old family allowances and the child tax allowance, which meant that the benefit went directly to the mother who would almost always spend it for the benefit of her children. The child tax allowance recognised the extra cost of having children through the tax system, and benefited families accordingly[i].
Under the new system individuals earning less than £50,000 will keep their child benefit, while those earning up to £60,000 will lose some in a tapered system; and everyone in this position can opt to keep their benefit and pay tax, or to lose the benefit entirely.
This means that a couple with a joint income of £90,000 but both earning just under the £50,000 cap will keep all their entitlement, where a single parent family earning £60,000 per year will lose it all[ii].
WLD Chair, Miranda Whitehead, said:
“During these difficult financial times it is important that everyone pays their share, and we understand how difficult this is, but children should not bear the brunt of budget cuts.
The child benefit was simple, effective and widely trusted. The new system is complex, unfair and open to challenge. This is not progress, these reforms have just created more stress and uncertainty for hard pressed families”
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[i] Families earning over £50,000 will be affected using a sliding scale and will have to decide by Jan 7th 2013 whether to continue to receive child benefit and change their tax code, or to opt out of receiving benefit altogether. For further details see the Inland Revenue website: www.hmrc.gov.uk
[ii] Self-assessment may save half a million families at the lower end of the scheme money, if they can carry forward tax losses or gross pension contributions.