As families struggle, HM Treasury refuses to raise the Child Benefit Charge threshold.
If a child benefit recipient earns more than a certain amount, they may be subject to the High Income Child Benefit Charge (HICBC).
The Government has recently been urged to raise this threshold in order to assist struggling families, but the Treasury has refused.
While there is no income limit for Child Benefit, those earning more than £50,000 will be subject to the HICBC. While this is intended to only affect high earners, recent analysis shows that those with limited disposable income are struggling with the charge, prompting calls for the Government to raise the threshold.
Patricia Gibson, the SNP’s Shadow Secretary of State for Housing, Communities and Local Government, recently pressed the government on Child Benefit in the House of Commons.
“To ask the Chancellor of the Exchequer, what plans he has to raise the HICBC threshold; and what recent assessment he has made of the impact of that threshold on families with one working parent on a low to average income,” she said.
The Chief Secretary to the Treasury, Simon Clarke, responded to this question yesterday.
“The Government is committed to managing the public finances in a disciplined and responsible manner by focusing assistance where it is most needed,” he said.
“Only a small percentage of people with comparatively high incomes are affected by the adjusted net income threshold of £50,000.”
Individuals claiming Child Benefit with average or low incomes are not required to pay the HICBC. However, if a claimant lives with a partner who earns more than £50,000, the charge will be borne by their partner.
“As a result, the Government believes that the current HICBC threshold is the best option at this time.”
The government monitors this, as it does all aspects of tax policy.”
While the government claims that this charge affects only a small percentage of families, the Low Incomes Tax Reform Group (LITRG) points out that the reality is more complicated.
LITRG also urged the government to raise the HICBC threshold earlier this month.
The organization stated that basic rate taxpayers are now liable for the charge, which is contrary to the original policy intent.
To account for nearly nine years of inflation, LITRG recommended that the threshold be raised from £50,000 to £60,000.
“When the HICBC was announced in 2010,,” said Tom Henderson, LITRG’s Technical Officer.
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