Confusion surrounds child benefit tax causing fears of intrusion

May 7, 2012

Following the government’s announcement to withdraw child benefit from households containing individuals who earn over £50,000, further debate has been generated about the practicality of its implementation.

Fears are growing which stretch far beyond initial concerns raised about the anticipated 500,000 additional individuals who will be subject to self-assessment as a result of the government’s changes, which has still been unresolved.

New concerns are centered around ‘couples’ and what determines a ‘partnership’. When similar wording was introduced to laws surrounding families claiming tax credits, HMRC found widespread confusion. 

A report written by Steven Kennedy on behalf of the House of Commons Library (16 April 2012) explains: “The ‘living together as husband and wife’ test is a well-established feature of the social security system, but its extension to the tax system raises a range of issues that could lead to complaints about intrusiveness.”

“Further more, whether or not a ‘partnership’ exists will have to be determined on an ongoing basis throughout the tax year, not just at a single point in time”

The report goes on to highlight that individuals may not be aware of the need to report changes in their personal circumstances.  It claims the government is also creating a ‘Couples Penalty’ leading to criticism by The Centre for Social Justice who say that the proposed child benefits tax “could threaten a new wave of family instability and breakdown which flies in their commitment to shared parenting.”

It is clear the debate regarding the right way to implement a child benefits tax will continue way beyond its enforcement date of 7 January 2013.  

Jonathan Walton, partner, Whitley Stimpson explains: “The government has pledged its commitment against implementing a means-tested tax credit system but has yet to provide adequate answers about how the new law will be administered.”

“A resounding voice of confusion exists amongst those debating how to administer the child benefits tax with an overwhelming sense of agreement that many more people will be required to complete and return self-assessment forms which will prove problematic regarding interpretation of the law.”

Whitley Stimpson has provided sound tax advice to individuals and businesses for more than 80 years. For further information or to book an appointment with one of Whitley Stimpson’s tax specialists, please visit or call 01494 448122.