Emma Agyemang and George Parker (“Tax trap Hunt pressed to end child benefit ‘unfairness’”, Report, February 23) are quite right to describe the impact of the high-income child benefit charge as “one of the UK’s most notorious tax cliff edges”. The marginal rate of additional tax to be paid if either parent earns £50,000 per year or more of “adjusted net income” increases with each additional child, with the charge equating to the value of child benefit received at £60,000. Alternatively, parents must opt out of getting child benefit entirely.
The high-income child benefit charge was introduced in 2013 in response to objections that cuts were falling on those on low income in particular. Such objections were valid, of course. However, the charge to counterbalance these cuts was imposed only on those on middle or high incomes bringing up children (and thus receiving a “benefit”).
But child benefit replaced a tax allowance as well as family allowances when it was introduced in the late 1970s. It therefore became the key mechanism in our fiscal system intended to achieve some horizontal redistribution, balancing the tax contributions of those with and without children.
It also helps to redistribute income over the lifecycle, being paid (to the mother or other main carer) when needs are likely to be greater and income may be reduced. In addition to the perverse outcomes highlighted in your article, therefore, the high-income child benefit charge fatally compromises the achievement of these sensible functions.
If we want better-off people to pay more tax, this should involve all those who are better off, rather than only those with children. The high-income child benefit charge should be abolished in the forthcoming Budget.
Fran Bennett
Oxford, Oxfordshire, UK
