The child benefit tax could be a disaster for the coalition

More than 300,000 households have not been informed that they must either stop claiming child benefit or pay a new tax.

2013 will be a year of dramatic changes to the welfare system: the introduction of the benefit cap, the abolition of Council Tax Benefit and, most notably, the national rollout of Universal Credit. But the first test for the government will come next Monday when the withdrawal of child benefit from higher earners begins. From 7 January, payments will be tapered away from individuals earning over £50,000 and completely withdrawn at £60,000 (however, a household with two earners each on £50,000 will keep the benefit in full). Those households affected will either need to stop claiming the benefit or pay a new tax (known as the High Income Child Benefit Tax Charge) to cover the cost of the payments. Families will lose £1,055.60 a year for a first child and a further £696.80 a year for each additional child, meaning that a family with three children stands to lose £2,449.20 - the equivalent of a £3,500 pay cut (since child benefit is untaxed)

With the changes announced as long ago as the 2010 Conservative conference, the government has had no shortage of time in which to inform those who will lose out. But as today's Telegraph reports, almost a third of the families affected have still not been formally warned that they will no longer be eligible for all or part of the benefit. Of the 1.1 million households due to be affected by the change, 316,000 have not yet been contacted by the tax authorities. As a result, having missed the opportunity to opt out of the new system (as 160,000 have done), they will have to fill in self-assessment forms or face fines running into hundreds of pounds.

A spokesman for HMRC insists that "extensive advertising, media and online activity" means those affected will know about the changes. However, it's not hard to imagine that some families will get a nasty surprise when they discover that they owe hundreds of pounds in additional tax.

But then the Conservatives have long appeared complacent over the policy. Last year, in a bid to assuage Tory MPs fearful that the party could be heading for a 10p tax moment, George Osborne released private polling showing that 82 per cent of people favour the plan, with just 13 per cent opposed. But as I've argued before, more important than the question of how many oppose the policy, is the intensity of their opposition. If even a small chunk of the 13 per cent opposed to the move vote against the Tories in protest at the next election, the party will suffer significant losses. And those who lose out certainly won't be feeling charitable if the government hasn't had the courtesy to inform them of as much.

George Osborne announced the coalition's plan to remove child benefit from higher earners at the 2010 Conservative conference. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

YouTube screengrab
Show Hide image

Listen: Schools Minister Nick Gibb gets SATs question for 11-year-olds wrong

Exams put too much pressure on children. And on the politicians who insist they don't put too much pressure on children.

As we know from today's news of a primary school exams boycott, or "kids' strike", it's tough being a schoolchild in Britain today. But apparently it's also tough being a Schools Minister.

Nick Gibb, Minister of State at the Department for Education, failed a SATs grammar question for 11-year-olds on the BBC's World at One today. Having spent all morning defending the primary school exams system - criticised by tens of thousands of parents for putting too much pressure on young children - he fell victim to the very test that has come under fire.

Listen here:

Martha Kearney: Let me give you this sentence, “I went to the cinema after I’d eaten my dinner”. Is the word "after" there being used as a subordinating conjunction or as a preposition?

Nick Gibb: Well, it’s a proposition. “After” - it's...

MK: [Laughing]: I don’t think it is...

NG: “After” is a preposition, it can be used in some contexts as a, as a, word that coordinates a subclause, but this isn’t about me, Martha...

MK: No, I think, in this sentence it’s being used a subordinating conjunction!

NG: Fine. This isn’t about me. This is about ensuring that future generations of children, unlike me, incidentally, who was not taught grammar at primary school...

MK: Perhaps not!

NG: ...we need to make sure that future generations are taught grammar properly.

I'm a mole, innit.