UK Politics

Tory MP Mark Field criticises child benefit cut for better off

A Conservative MP has criticised planned changes to child benefits for people earning over £50,000, saying they are "almost a tax on aspiration".

Mark Field said many Tory MPs were concerned about the impact of the cut on middle-income families.

He also told BBC Two's Daily Politics the change might be delayed until the start of the next financial year.

Ministers say the cuts are needed to ensure the better-off do their bit to reduce the deficit.

Mr Field, MP for Cities of London and Westminster, told the Daily Politics: "The big concern many of us Conservatives have about this is that it is almost a tax on aspiration.

"If you're on £40,000 a year, you aspire to earn £50,000 and you think, 'Actually, I'm going to be losing this if I have two or three children.'

"And the marginal rate of tax if you've got three children and earning between £50,000 and £60,000 are often about 65% - a massive disincentive."

'Clawback option'

Millions of parents will be getting a letter within the next month from HM Revenue and Customs spelling out how their child benefit could be cut.

Households where at least one person earns more than £50,000 will have the benefit effectively reduced or stopped.

Tax officials say the changes could mean up to 500,000 parents having to complete self-assessment tax forms.

Parents will be asked to declare if they, or someone else in the household, earns over the £50,000 level.

They can then choose either to stop receiving the benefit, or choose to continue to receive child benefit with the money clawed back via the tax system.

The "clawback" option will see the highest earner over £50,000 in a child benefit household paying an "income tax charge" equivalent to some or all of the amount they currently get.

The benefit received will be recouped gradually as the income rises above £50,000, with the child benefit being eroded completely once their income is £60,000 or more.

The change is due to come into force on 7 January 2013. For someone with two children earning £60,000 a year it is the equivalent of a 4.5% pay cut.

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