Couples face child benefit quiz under new tax

Parents and two children Some couples may not be happy to swap tax and benefit details

New child benefit rules mean that some high earners and their partners will be expected to disclose their finances to each other from next January.

People will also be able to find out from HM Revenue and Customs if their partners receive child benefit, or earn above £50,000 a year.

The changes are part of the forthcoming taxation of child benefit in households where someone earns above £50,000.

Experts say the changes will breach key tax confidentiality principles.

"This is a chip away at independent taxation and taxpayer confidentiality, because there is no other way of going about it," said John Whiting, of the Chartered Institute of Taxation (CIOT).

Chas Roy-Chowdhury of the ACCA accountancy body said: "I think the Treasury have devised a bad tax that HMRC are having to implement.

"It is a bad idea to tax an individual who is not receiving the benefit."

Checking each other

The new tax starts on 7 January 2013 and will affect 1.2 million families.

It is going to be levied on those in a household whose "adjusted net income" is more than £50,000 a year and who claim, or whose partner claims, child benefit.

Child benefit facts

  • Child benefit is a tax-free payment that is aimed at helping parents cope with the cost of bringing up children
  • One parent can claim £20.30 a week for an eldest or only child and £13.40 a week for each of their other children
  • The payments apply to all children aged under 16 and in some cases until they are 20 years old
  • The system is administered by HM Revenue and Customs (HMRC) which pays out to nearly 7.9 million families, with 13.7 million children

HMRC says it will "expect" couples to discuss their tax and benefits with each other, to find out if the higher earner is liable for the tax, despite the policy of separate taxation of married couples being in place since 1991.

HMRC will also let taxpayers ask for rudimentary information from its records to see whether or not their partners receive child benefit, or have an "adjusted net income" above £50,000, and should be paying the new tax.

This runs counter to the general principle of taxpayer confidentiality, which has been a formal part of the income tax system since 1803.

Revealing someone's tax records is currently a criminal offence for HMRC officials.

The relaxation of the two principles is going to happen because otherwise high earners who should pay the tax would be able to claim they were unable to find out if their partner received child benefit, and vice versa.

"In stable relationships you can see this carrying along smoothly," John Whiting said.

"But what about relationships that break up during the year?

"There are so many practical questions [about how the new tax will operate]," he added.

'Best of a bad job'

Responsibility for paying the tax will lie with the high earner in the household.

Start Quote

HMRC would expect couples to discuss their tax or benefit details with each other”

End Quote HMRC

HMRC also administers the child benefit system, which pays out to nearly 7.9 million families, with 13.7 million children.

So the Revenue could cross-check its list of high earners with its list of child benefit recipients, to see where they coincide.

But it hopes that taxpayers who have to pay the tax will save it the trouble and identify themselves when they are sent forms, as part of an enlarged self-assessment tax system next year.

An HMRC spokeswoman explained how the Revenue expected the new arrangements to work.

"HMRC would expect couples to discuss their tax or benefit details with each other," she said.

"However, for taxpayers unable to discuss their financial affairs, we will develop a process with appropriate security checks so HMRC can provide 'yes/no' answers to simple questions about whether child benefit is paid to the taxpayer's partner or about the level of a partner's income," she added.

Despite the implications of the emerging policy, HMRC said: "We are committed to protecting the principle of individual taxation and confidentiality. These principles will be at the centre of our child benefit compliance procedures."

Chas Roy-Chowdhury said: "It is making the best of a bad job.

"The person paying has to comply with the system so there has to be a way they can get the information."

£700m saving

Currently, a parent can claim £20.20 a week in child benefit for their eldest or only child, and £13.40 for each subsequent child.

The money is not taxed and the system is geared towards paying the mother.

The payments apply to all children aged under 16 and in some cases until they are 20 years old.

The policy of withholding child benefit from families where there is a high earner was first suggested by the coalition government in 2010.

In this year's Budget the plan was refined so that it would not apply, as first suggested, to all those who pay 40% income tax on any of their incomes.

Instead, the tax will apply gradually at £50,000 of income, with the child benefit being eroded completely once someone's income is £60,000 or more.

It is expected to save the government nearly £700m a year.

If the high earner is also the person claiming child benefit for their children then they can simply stop claiming it in order to avoid the tax charge.

But if a parent with a high-earning partner claims the benefit, their partner will have no power to tell them to stop claiming it so the new charge can be avoided.


The government estimates that 1.2 million families receiving child benefit will have to pay the new tax; 70% will lose all their benefit and the remaining 30% will lose just a portion.

The affected families are expected to lose £1,300 a year on average.

The Revenue said that if it suspected that individuals were not paying the new tax charge when they should, it would be able to cross-check its income tax records with its child benefits records.

"HMRC will apply existing risk assessment techniques to identify where, for example, income has been understated or the liability has not been reported," said the Revenue spokeswoman.

"Existing penalties will apply to non-compliant taxpayers," she pointed out.

That means fines or possible prosecution.



This entry is now closed for comments

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  • rate this

    Comment number 726.

    @ 201.SleepingSpurs

    "I wonder if the advocates of abolishing child benefits would like to be the ones to bury the children that starve to death as a result?"

    Sensationalist nonsense. A line has to be drawn somewhere. People coped before it was introduced and it's about time that we realised that having a child is not a right, it's a responsibility.

  • rate this

    Comment number 725.

    @716 - Just like Parliament - full of left AND right wing loonies (dare I say Extremists). It's what's makes the world go round (and round and round) - probably why we never get anywhere
    Hands up for the middle ground? Anyone?

  • rate this

    Comment number 724.

    697. Low quality means not being bright enough to hold down a job at Tescos. I have respect for Tesco staff i have met, they are hard working and responsible. But its not rocket science. If you are not good enough to sort trolleys for Tesco, I'd say you were low quality.

  • rate this

    Comment number 723.


    Sounds more like your view is: "Someone has a different view that I can't argue against, ... my solution is to belittle them to try and invalidate them, rather than debate / change them.

    not good I'm afraid.

  • rate this

    Comment number 722.

    @ 700.Ppuj
    "We all know the ones. Never work, never pay into the system, create a crime wave wherever they live, have no respect for their neighbours and have children by a new partner every year.
    Why should anyone be encouraging these people?

    Further: Labour's "education, education, education" mantra was aimed at reducing feral kids but after 13 years proved to be yet another failure.

  • rate this

    Comment number 721.

    When we had our children CB was irrelevant. It would never have occurred to either of us to withold information about our earnings. Everything has been shared. Total household income should be assessed for CB so 1 earning just over the threshold should not be worse off than 2 earning just under the threshold. This is a stupid anomaly not redressed when this change was 'tweaked'.

  • rate this

    Comment number 720.

    706 Treena
    "Then the banks screwed us all"

    Sorry to disappoint you but I hardly think you can blame the bankers for the epidemic of teenage pregnancies in the UK's council estates! In the Amazon, some tribes blame unexplained pregnancies on river dolphins. It would appear that the Workers Revolutionary Party of Neasden blames Goldman Sachs!!

  • rate this

    Comment number 719.


    Ok but then dont have any more kids if you are needy, so lets make needy people financialy worse off if they do.

  • rate this

    Comment number 718.

    So, one non-working partner in a co-habiting marriage claims for the benefit and receives it... as a household they receive £20.20 per week. If the working partner was being paid over £60k per year, how much would they be getting taxed? Does the tax equate to greater than £20.20 p/w? If so, would there be an opt-out from claiming the benefit rather than being taxed?

  • rate this

    Comment number 717.

    What citizens should be aware of is the duty of government.
    "Life,Liberty and the pursuit of Happiness! That to secure these Rights, Governments are instituted among men, deriving their powers from the CONSENT of the governed.
    Majority VOTED for this lot. Got what you voted for! Stop whining!!

  • rate this

    Comment number 716.

    In defence of "Tsunami of Logic" normally any right wing comment is inundated with minuses and reported for no other reason than the loony left don't views that they don't agree with.
    HYS is dominated by the aforementioned left wing loonies so please just accept some come from a different - and far more reasoned - point of view.

  • rate this

    Comment number 715.

    Someone should let them know that 99.9% of us can well do without it and won't tolerate state snooping

  • rate this

    Comment number 714.

    My kids are grown up now. I was a bit puzzled when we started to receive extra money from the state just because we had kids, but it was useful for extra holidays. can't see the point of it. rather have lower taxes

  • rate this

    Comment number 713.

    If they do not already know all the details of each other's income they are not partners.

  • rate this

    Comment number 712.

    Where's the flaw is saying we need young people to replace old people? You think that we reduce the population by 3 million, then unemployment would go? Your argument assumes that we can have babies to order to precisely fill the job market. Brave New World? It's you that needs to think.

  • rate this

    Comment number 711.

    Basically New Labour made this a universal benefit for ideological reasons, Universal benefits mean benefits are not just the rich subsidising the poor & everyone can see themselves benefitting from the benefits system.
    The Tories loath this concept, you can't demonise those on benefits if virtually everyone is on them but altering it properly would cost more than they'd save so they're fudging it

  • rate this

    Comment number 710.

    If you are needy you should be helped by the state, otherwise provide for yourself and your family.

    Nobody should get a benefit 'as a right' or a freebie.

  • rate this

    Comment number 709.

    @ 700.Ppuj
    "We all know the ones. Never work, never pay into the system, create a crime wave wherever they live, have no respect for their neighbours and have children by a new partner every year.
    Why should anyone be encouraging these people?"

    This epitimises exactly the type of people most of us are against claiming benefits (after benefit after benefit)

  • rate this

    Comment number 708.

    PPuj - yes, they exist. we need discipline in schools, a more diversified economy which hopefully would help with the job situation.
    A method is needed to objectively sort the rogues from the genuinely needy - not as easy as it sounds but laudable.

    We also need to criminalise the scams perpetrated by the the financial sector and clean up taxation..big entitlement culture there too.

  • rate this

    Comment number 707.

    Child Benefit is just another benefit under attack but

    Tsunami of Logic must be some kind of - what is called now Troll ... it appears so often on the BBC Have Your Say - and very likely on other sites too under different names - perhaps with a little more savoury language no?

    Here it's just trying to wind up the 'lefties'

    An Attention Seeking Trickle of it's own Illogical Sadness ...


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