Child benefit – adding further complexity to the tax system

We’ve heard from successive governments that the UK taxation system is overly complicated and in need of simplification. In fact the current coalition government created the “Office of Tax Simplification”  (OTS) in 2010 with the express mandate of “providing the Government with independent advice on simplifying the UK tax system”.

It is virtually impossible for non-accountants to understand the nuances of tax rates, allowances and reliefs as it is, without the added complexity of the benefits system also being added to the mix to further confuse an unsuspecting public.

Next week’s change to Child Benefit may be fiscally sensible, the method of administration seems at odds with the OTS aims.

From 7 January, higher-rate earners (one parent earning over £60,000) will no longer be entitled to receive what was previously a universal benefit, and those earning between £50,000 – £60,000 will see the benefit reduced on a sliding scale. However, the onus has yet again been put on the household with effected taxpayers either being asked to “opt out” of the benefit, or having the amount paid clawed-back by HMRC under the tax return system.

The system was explained fully in our earlier blog post here.

The ‘rub’ however is that anyone who is classed as higher paid under this system will have to fill in self-assessment tax returns or face the prospect of being fined, bringing potentially thousands of people into the self assessment regime.

It may well be that you’ve never been sent notification to complete a Self Assessment Return in the past and the Child Benefit Changes bring you unwittingly into the net, if so the Burgis & Bullock personal tax team are here to help with any taxation matters call us on 0845 177 5500, or contact us online

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