High Earner Child Benefit Fines Farce

High Earner Child Benefit Fines Farce

by Ashley Clark, Director

The Treasury has confirmed that high earners who make false declarations concerning their earnings in order to continue to receive child benefit payments will face fines.

We suggest the Treasury has just not thought this through and it is a political hot potato that they may have to drop or let it cool down.

The problem is that some people will be penalised for being high earners whereas others will continue to receive benefits even though their total household income could be nearly £44,000 more than others.

The Higher Rate of Tax Earnings Limit is currently £43,875pa.

• If just one adult in the family earns above this then child benefit stops.
• Yet if two adults in a family unit earn say £43,000 each, a combined household income of £86,000 they will continue to receive child benefit.
• This means a two earner family could have over £43,000 a more year income and than a single earner family and still receive child benefit.

This is a farce and will lead to people not making full earnings disclosures and will be very difficult to police:

• What if parents are not married? How will benefits agencies track down false claims?

• What if parents do not live together?

• What if a parent refuses to put their high earning partner on the birth certificate?

• What if a high earning partner of a parent is actually not the child’s parent i.e.  living with a new partner? Why should the single parent because they live with a high earner who has no legal or parental responsibility under the Children Act suffer?

• What if you are a lower earner at the start of the year and then get a special bonus or pay rise at the end of the year? Do you get penalised for not knowing that you would cross the barrier? Do you have to pay the money back? Does this discourage you from trying to do better at work?
  

This move is ill thought out and penalises many families and is most unfair.  Fining people and making demands for repayment is just not the answer. 

If child benefit is to be means tested then it needs to be fair and include total household income.

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