Child benefit: not a right

Today, Angela Epstein has been advertising her handsome household income and complaining about a change in tax law that takes effect on Monday.

Currently, the eldest child triggers a single child benefit payment for all parents of £20.30 per week, each subsequent child attracting £13.40 per week. So a one-child family will take home £1,055.60 per annum, going up to £1,752.40 for two kids.

As of Monday, households with children in which at least one guardian earns a gross income in excess of £50,000 will have their child benefit reduced linearly, until that income hits £60,000 at which point the payment will fall to zero.

There are countless discussions and tirades about whether the mechanism for the cap is right. For example, an equal-earning couple with a gross income of £98,000 would keep their entire benefit, while a family with a lone working parent earning £60,000 will lose it all. But that doesn’t seem to be Angela’s primary argument for her perceived entitlement to receive child benefit.

Angela’s primary argument seems to be this: Why should kids be discriminated against because their parents earn handsomely? She likens it to schooling and health services.

But here’s the fundamental issue with her argument. Child benefit is a benefit paid to the parent for having a child. It is not a direct benefit to the child. Indeed when enrolling for ours in 2007, I was told that I couldn’t have the money paid into my daughter’s account directly because it was not in the recipient’s name. So instead I set up an awkward direct debit to hive the equivalent amount of money off into her account.

Health services, schooling and the like are benefits—albeit non-financial—for the children themselves.

In principle, I have no issues with the new legislation. It is in essence a tax against high earners. But actually, it brings those that are parents back in line with childless high earners.

As an aside, why HMRC/DWP cannot tie their tax records together and automatically stop the payments for any couples affected by the legislation I have no idea. (That’s not true. I have all too good an idea. It’s all about CID and CIS. But that’s not important right now.) Instead, HMRC will continue to pay the benefit to parents who don’t actively opt out, and then claim it back under the self assessment. Luckily, this particular benefit is administered by HMRC, not DWP. Otherwise, all hell would break loose.