News: Confusion warnings over child benefit reclaim
A soon-to-be introduced new system for cutting child benefit payments to higher earners could lead to widespread confusion, according to a report in the Daily Telegraph.
Under the system, due to be introduced at the beginning of January, when at least one partner in a couple earns more than £50,000 per year, child benefit will be cut. It will be stopped altogether for couples where one partner earns more than £60,000.
These cuts will be implemented via a complex ‘clawback’ system which will see the couples paying the money back via an additional tax paid by the higher earner. This will mean hundreds of thousands of people needing to fill in self-assessment tax return forms for the first time.
In addition, reports suggest that in cases where the couple divorces and the mother moves in with a new partner who is a high earner, their new partner will have to pay the ‘clawback’ tax, even though the affected children are not his.
Letters outlining these changes are currently being prepared and will be despatched to affected families shortly. However, they will reportedly be sent to the highest earner within the family, who is not usually the person who receives the child benefit. This could lead to confusion, experts suggest.
Patricia Mock, a tax director at Deloitte’s, said:
“Part of me thinks we are just making up really complicated scenarios for amusement’s sake but it will happen.”
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