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Death by a Thousand Cuts – Tax Partner of Cornish Firm Criticises New Tax on Child Benefit

James Bailey, Tax Partner at Truro-based accountancy firm Robinson Reed Layton, today voiced his criticism of the new Child Benefit tax which comes into effect in January.

FOR IMMEDIATE RELEASE

 
 
Tax Partner James Bailey
Tax Partner James Bailey
PRLog (Press Release) - Nov. 7, 2012 - James Bailey, the Tax Partner at well-known Cornish accountants Robinson Reed Layton, today voiced his criticism of the new Child Benefit tax which comes into effect in January.

“These new rules involve a new tax called the “high income child benefit charge” and are ridiculously unfair in the way they operate,” said James Bailey.  

“As well as producing an extremely steep rate of tax (in certain circumstances more than 100%) for those who are caught for the new charge, it also goes against the fundamental principle of confidentiality that is supposed to underpin HMRC’s tax gathering efforts.  For the first time since 1990, when the practice of taxing a husband on his wife’s income was abolished, it is necessary for each member of a couple to know what their partner earns in order to deal with the new tax charge.  In one way it is even worse than the antiquated system of taxing husbands on their wives’ income, in that it applies not just to married couples but to any couple, of whatever sex, where one of them is entitled to child benefit.

“The tax is particularly unfair in that it is such a blunt instrument – a couple receiving child benefit could have income of up to £100,000 between them and lose no child benefit at all, provided that the income was split 50/50.  Another couple could have income of £60,000 and lose all of their child benefit, if only one of them has the income.

“The charge falls on the one whose income is over £50,000, or if both partners have income above that level, on the one with the highest income.   It is this that means it will be necessary to know your partner’s income to determine who pays the new tax.

“Many people caught by this new charge will not currently be completing self-assessment returns – for example, those who are employed and whose income is taxed under PAYE – but if they fall foul of the new child benefit rules they will need to complete a self assessment tax return each year in future, starting with the year ending April 2013.  

“The final straw is that the new rules take effect for child benefit received after 7 January 2013.  This means that only a small amount of child benefit will fall into the tax year ending 5 April 2013, but anyone affected has to declare the fact and sign up for self assessment by 5 October 2013, and HMRC’s published guidance on this matter is quite explicit in saying that there will be penalties for those who fail to do this by that deadline.

“It is estimated that half a million additional self assessment returns will need to be completed as a result of this measure, and each one of them will represent the erosion of the principle of separate taxation for spouses that has existed for almost the last quarter of century.”

For further information please call James Bailey on 01872 276116.

Photo:
http://www.prlog.org/12018135/1

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Contact Email:
***@eventy.co.uk Email Verified
Source:Eventy - Marketing & PR
Phone:01326 376273
State/Province:Cornwall - United Kingdom
Industry:Accounting, Family
Tags:Child benefit, tax, accountancy, cornwall
Shortcut:prlog.org/12018135
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