The once-universal welfare payment is now means tested. But does anybody understand how?
Age: First paid out in 1946.
Appearance: Every four weeks in the bank accounts of millions.
What is it? A universal welfare payment for parents worth £20.30 a week for the eldest or only child and £13.40 a week each for the rest.
And the government is cutting it? It is indeed. Or, at least, it’s no longer going to be a universal payment.
Meaning? Meaning, as of 7 January, 1.1m parents earning more than £50,000 a year can expect to see their benefits substantially reduced, and the 820,000 parents pocketing more than £60,000 a year will somehow have to learn to live without.
And presumably this is saving the taxpayer money? Yup. An estimated £1.5bn next year, in fact.
Doesn’t sound wildly unreasonable, does it? In theory, no. In practice, there’s a right way to make a cut and a wrong way.
And this is the wrong way? No, this is the bizarre way. For a few reasons.
Such as? Such as the fact it doesn’t distinguish between single-income and double-income families, meaning a single parent on £60,000 a year will lose their child benefit entirely and a couple on £50,000 each will keep every penny of theirs.
Well that’s just silly. Yup. But not as silly as the HICBC.
The what? The High Income Child Benefit Charge. Rather than simply stop or reduce the payments for parents earning more than £50,000, HMRC have created the HICBC to claw it back. Which, for most people paying it, will cost exactly the amount they have received in child benefits, but require them to fill out a lengthy self-assessment tax return.
Making it less of a child “benefit”, and more of a child “paperwork-intensive interest-free mini-loan”? Essentially.
Is there any way to avoid the faff? Only by opting out of receiving child benefits entirely before 7 January.
That’s a bit short notice. It is. Especially for the more than 300,000 parents who will be liable to pay the charge but have not received a letter, phone call or email about it.
Do say: “Surely there’s a better way?”
Don’t say: “We’re going to end up with rich people having kids just to get cheap payday loans.”