House of Commons · Westminster Hall
02 February 2023 · 4 other contributors · 8,708 words
Opened by Martyn Day SNP Linlithgow and East Falkirk
Responding minister: Victoria Atkins
Summarised by AI from the official record, so it can contain mistakes.
Martyn Day raised concerns about high income child benefit charge — [graham stringer in the chair] in Westminster Hall. A government minister responded.
Key points
Key requests to Government
I ask the Minister to review the current policy, make it fit for purpose, and commit to restoring child benefit as a universal benefit again. Will she also address how women or affected men caught in circumstances where they are unaware of their partner's earnings can make retrospective claims for national insurance credits?
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
I am concerned about the unfairness of the high income child benefit charge, which has consequences for some who do not consider themselves to be on a high income. It ignores family size, how many earners are in the household, and what disposable income is available after basic needs such as food, housing and energy costs are all met. Constituents have highlighted issues with HMRC's handling of cases, including incorrect assessments, delays, and unfair penalties.
Douglas Chapman argued that the changes to child benefit introduced in 2013 by George Osborne are unfair and flawed, causing more families to be caught in a tax trap without proper information. He urged the Minister to clarify why over half a million people have stopped claiming child benefit due to these changes, highlighting how not claiming can impact national insurance contributions and state pension entitlements for parents, particularly women. Chapman also called for scaling up the £50,000 threshold to reflect pay inflation from 2013 and suggested devolving child benefit to Scottish and Welsh Governments to tackle child poverty more effectively. The MP asked if the Government could look more generously at families where both partners earn below £50,000 but their combined income exceeds £60,000.
Discussed anomalies in the child benefit threshold, highlighting that two partners each earning £49,000 do not face additional tax charges but a partner earning £52,000 and another £10,000 does. Mentioned plans to bring forward a ten-minute rule motion on the issue. Emphasised the unfair impact of the cost of living crisis on working families and the need for child benefit reforms. The MP questioned why a family earning £98,000 collectively is exempt from the charge when another family earns £62,000 collectively and has to pay extra tax.
The high income child benefit charge is too complicated, leading to households that are entitled to child benefit not claiming it. This results in the loss of national insurance credits until a child turns 12, impacting state pension and other benefits if one parent is not working. Asked if the charge should be uprated in line with inflation to address the cost of living crisis.
The MP highlighted the challenges faced by families due to the cost of living crisis, noting that hundreds of thousands more families are being pulled into the high income child benefit charge. She criticised the Government for not addressing the fiscal drag caused by freezing the threshold at £50,000 and pointed out that over 1 million people who want jobs cannot find them while employers struggle to fill over 1 million vacancies. The MP also emphasised the need for local innovation in employment support services.
Government Response
Victoria AtkinsCongratulated the hon. Member for Linlithgow and East Falkirk on securing the debate, acknowledging tensions in the tax system regarding child benefit. Emphasized maintaining child benefit's importance for low-income families, noting that 7.7 million families receive assistance through it, and stated that child benefit will increase by 10.1% from April this year. Highlighted other government support measures like free early education and childcare offers. Acknowledged economic challenges but emphasized fiscal responsibility and sustainability of welfare spending, stating the high income child benefit charge affects a small proportion of claimants with incomes above £50,270. Provided statistics: around 373,000 individuals declared liability in 2019-20. Discussed individual taxation principles and complexities of means testing while emphasizing fiscal responsibility. Mentioned HMRC administrative burdens and steps to notify those who may need to complete a tax return.