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Child Benefit Rule Changes Will Mean 'Nasty Surprise' For Thousands Of Families

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Thousands of families are in for a "nasty surprise" after not being informed of new child benefit rule changes which come into force on Monday.

HM Revenue and Customs is undertaking an "extensive" media campaign to inform the 300,000 families that it does not hold sufficient data on to contact before the deadline.

It estimated 1.1 million will be affected by the move to new means-tested rules but only 800,000 have received letters outlining plans. It added that those affected would need to complete self-assessment returns.

child benefit

300,000 families will be affected by the rule changes on Monday

Catherine McKinnell MP, Labour's shadow exchequer secretary to the Treasury said: "David Cameron and George Osborne have failed to think through this policy or how it will work in practice.

"There could be a nasty surprise in store for thousands of parents if they are not aware of the changes and have to pay back thousands of pounds in child benefit at the end of the year."

Under the new child benefit rules, families where one parent earns between £50,000 and £60,000 will have their benefit reduced on a sliding scale, and stand to lose the benefit completely when a parent is earning over £60,000.

From next week, families in which one parent earns more than £60,000 a year will lose all their benefit, which is currently £20.30 a week for the first child and £13.40 for each child after that. Families where one parent earns between £50,000 and £60,000 will have the benefit reduced on a sliding scale.

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The change will cost families with three children and at least one parent earning over £60,000 about £2,450 a year. And it will produce anomalies, as two-earner households where both parents earn £49,000 will keep all their benefit, while neighbours who have one parent on £60,000 and the other staying at home will lose all of theirs.

McKinnel said: "This policy not only risks being a costly administrative nightmare, it's also unfair.

"It's totally perverse that single earner families on £50,000 will see their child benefit cut while some couples earning as much as £100,000 keep all of theirs and those on over £150,000 get a big tax cut this year."

The Government previously outlined plans to cut child benefit for high-earning families as part of its drive to save the Treasury approximately £1.7 billion a year.

A Treasury aide said: "We must deal with Labour's deficit so that our children don't have to and do so in a way that is fair - it is very difficult to justify paying child benefit to the wealthiest 15% of families."

It is understood that the total number of opt-outs from the payments so far received by the HMRC stands at 169,550, with the deadline closing at midnight on January 6.

The total web hits for the High Income Charge online guidance is currently at 1,014,000.

An HMRC spokesman said: "HMRC have written to 800,000 people about the child benefit changes. There may be cases where people's circumstances have changed, for example their income may have increased or address may have changed, and we will not yet have up-to-date information. However to ensure people know about the changes we are also using extensive advertising, media and online activity, as well as written communication.

"Our target audience will have seen the adverts five times on average and there has been extensive media coverage of the change. Over one million hits on the guidance section of the HMRC website and 100,000 uses of our online calculator show that the message is getting through."

Caroline Davey, the director of policy at Gingerbread, the national charity for single parents, said the chancellor was unfairly targeting families.

"It has always struck me as singularly unfair that the only higher earners being asked to pay more are those with children. It has always struck me as singularly unfair that the only higher earners being asked to pay more are those with children," she said.

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