Child Benefit cuts – the sign of things to come?

Child benefit was introduced by the Labour government in 1977 (that must have been the influence of Punk Rock?). It is a benefit paid to anyone with children under 16 – regardless of whether they are a millionaire or living below the poverty line. The weekly rates are £20.30 for the first child and £13.40 for the second child onwards. That just about covers the packed lunches, judo lessons and The Beano in One Accounting’s household.

On Monday Chancellor George Osborne said that from 2013 the benefit would be removed from families with at least one parent earning more than about £44,000 a year.

Thumbs up to the Chancellor for not messing around with endless form filling and means testing to decide if you are eligible. A simple glance at your P60 or self assessment tax return by HMRC will indicate whether you get it or not.

Thumbs down for missing the obvious outcry that it is not linked to family income, merely the income of the highest earner in the household. As has been reported, a household with one earner on £45,000 will not receive the benefit, but a household with two earners on £43,000 will receive it.

Of course, it would be wrong for us to suggest that 2013 will see a rise in income shifting from one spouse to the other (open to the self employed with a clever accountant) to ensure that the highest paid earner drops below the threshold, wouldn’t it?

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