VICTORIA BISCHOFF: A complete overhaul of the failing child benefit system is needed.
VICTORIA BISCHOFF: The broken child benefit system needs to be completely overhauled.
For years, it has been clear that the child benefit system in this country is inadequate.
For starters, there’s a poorly designed and fundamentally unfair cap.
The benefit is available to couples with a combined income of £98,000 or more.
Even if they are single parents or their partner is not working, families with one person earning £60,000 get nothing.
Despite rising wages and rising inflation, the cap has been frozen for nearly a decade, meaning more and more families are losing access to this essential help.
Then there’s the fiendishly complicated administration of the diet.
Those earning between £50,000 and £60,000 are only entitled to part of the benefit and must repay part of it through the not-so-catchy tax burden called High Income Child Benefit, or HICBC. This involves the tedious task of completing a self-assessment tax return.
Even families with one person earning more than the cap may not always be able to simply decline payments.
Indeed, if one of the partners is not working, the fact of continuing to claim child benefit allows him to accumulate national insurance credits, which will be applied to his statutory pension.
However, this money must be repaid through a self-assessment once again.
To make matters worse, the IRS has done a terrible job explaining how the complicated system works to families.
It is a disastrous recipe to rely on leaflets distributed in maternity wards and to assume that everyone reads the newspapers.
Is it any wonder then that tens of thousands of parents have made costly mistakes?
Because HM Revenue and Customs (HMRC) was slow to catch these errors, many people were hit with surprise bills dating back years, as well as huge fines.
The tax office has now been given legal authority to review the financial records of 170,000 families it says claimed the allowance in error.
Rather than hunting down troubled families, these powers are generally reserved for investigating the most serious tax offences.
Yes, parents who are not entitled to child support must repay what they owe; otherwise, those who have done well will be penalized.
But, given that many people may have had no idea they had asked for too much, is it really necessary to use such harsh tactics?
This broken system has been in desperate need of fixing for a long time.
Meanwhile, as we previously reported, HMRC could consider spending a bit more time and effort on raising awareness of the quasi…
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