Chair of Treasury Select Committee: Make Child Benefit Fairer & Simpler
Harriet Baldwin MP (Chair Treasury Select Committee) said on Woman’s Hour this week that her number one recommendation to the Chancellor for the Spring Budget would be to change the Child Benefit system.
This is a massive turnaround and exciting for MAHM who via Miriam Cates MP, and in cooperation with Tax & the Family, sent briefing papers to Harriet.
Harriet Baldwin voted to introduce the Higher Rate Child Benefit tax charge in 2013 and felt it was appropriate for higher earners to be affected. However because of our campaigning and those of other prominent campaigners such as Martin Lewis and Dan Neidle she recognises that it needs to be changed and simplified. Harriet recognises that it disproportionately affects stay at home parents and single parents who lose their benefit at half the household income of dual earners.
“For a breadwinner to earn any more income over £50k he/she would lose over 70% of every £1 earned back to the Treasury as tax. ”
MAHM sent Harriet case studies showing the perverse effects of the HICBTC which meant for many couples a marginal tax rate of over 70% or, in other words, for a breadwinner to earn any more income over £50k he/she would lose over 70% of every £1 earned back to the Treasury as tax. This can be even more in cases where a family has more than two children.
Harriet recognised that for many families it was not worth taking a promotion or pay rise and that if the Chancellor wanted to encourage growth and encourage people to work harder these marginal tax rates and cliff edges had to change.
Harriet also recognised that the self-assessment forms were complex, and that many families were penalised for not getting it right. She also acknowledged that many mothers have missed out on their pension credits because of failing to sign up for Child Benefit only to pay it back.
The Chancellor has some headroom because of higher tax revenues. The Child Benefit tax charge was originally meant to affect only the top 15%. Because of the way our independent tax system works - it meant that some families lost their benefit who were not in the top 15% but much lower down the income distribution whilst other families who were in the top 15% earning up to £100k household income could keep it. The system needs changing and Harriet acknowledged that, in an ideal world, it would return to being universal.
Tax & the Family and MAHM have come up with a proposal which is second best to making Child Benefit universal.
Further action?
Click here for a sample letter to send to your local MP.
Visit our Child Benefit Tax Charge page for more information.
We need targeted tax cuts for families with children:
Abolish the Child Benefit Higher Rate Tax charge
An end to the high marginal tax rates that punish work
Remove the conditionality clauses forcing mothers of preschoolers to work 30 hours a week or lose their benefits
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