Danni Hewson, head of financial analysis at AJ Bell and founding ambassador of Money Matters, comments the Conservative Party’s proposed plans to raise the high income child benefit tax charge threshold to £120,000 for households:
“The Spring Budget boost for parents which raised child benefit thresholds was a crowd pleaser then and the Conservative Party is clearly keen to replicate that goodwill ahead of the general election on 4 July.
“Unfairness has been baked into the current system which allows two-parent households with combined earnings of up to a penny under £120,000 to keep their full entitlement, whilst others lose the benefit entirely because one parent tops £80,000. But testing this cap against households rather than individuals is likely to prove a massive headache for HMRC and raises the question about how long it would take to implement such a change.
“There will also be many voters wondering why this couldn’t have been done at any other point over the last 14 years, during which time frozen income tax thresholds and inflation have gnawed away at families’ incomes. The government may point to its more recent record and increases to free childcare provision will have helped families – in particular mothers who have struggled to afford to return to the workplace.
“Research carried out for AJ Bell’s Money Matters campaign before the latest changes came into place found only 55% of women returned to work full time after having their first child and just 26% did so after having child number three. But the childcare cliff-edge has penalised people who have wanted or needed to have one parent stay at home whilst the other carries the economic burden.
“Then there’s the issue of where the money will come from, with the Tories claiming the plans would cost £1.3 billion. Cracking down on tax avoidance and evasion appears to be the favoured method of cobbling together the funds for these proposals, a strategy that feels more akin to rifling down the back of a sofa already stripped of all its cushions than a sure-fire revenue raiser after the election.
“Elections are a time when promises are plentiful and this is certain to grab headlines, but promises don’t pay the bills and voters know it.”
