Child benefit cuts ''should be held back''

07 November 2012

The Chancellor George Osborne has been told to delay for three months his planned cut in child benefit for high earners. This would mean bringing in the changes next April rather than January.

The Institute of Chartered Accountants of England and Wales (ICAEW) wrote to Osborne to express concern that the government had not 'sold' the policy to the public properly and had not addressed some of the complicated factors involved in the change.

The coalition has said that all of the child benefit will be taken off families where one person earns more than £60,000 and a portion will be taken away if an individual earns between £50,000 and £60,000 – but the money won't actually be stopped, it will be claimed back from taxpayers through their tax returns.

The ICAEW chief executive Michael Izza wrote: "This single policy is symptomatic of a wider problem. [The] Treasury is setting policies… which are impossible for [Her Majesty's Revenue and Customs] to implement without creating complex, burdensome processes and requirements for taxpayers and businesses."

Labour's shadow Treasury minister Catherine McKinnell said the ICAEW was right to air its concerns with the Chancellor because the child benefit policy had not been thought through properly and was proving to be a costly administrative nightmare.

She said the policy was also unfair because it penalised families with a single high earner and allowed families bringing in a combined £100,000 to keep every penny of their child benefit. "If ministers really wanted those on the highest incomes to pay more they should cancel their tax cut for people on over £150,000 rather than targeting families on £50,000," McKinnell said.