UK & World News
Child Benefit: New Partners May Lose Out
New partners of divorced parents will lose part of their salary if they earn more than £50,000 under changes to child benefits, according to accountants.
The anomaly will affect people even if the children who live in their house are not actually theirs.
HM Revenue and Customs is set to write to taxpayers who could be affected by the reforms, which come into effect in January, next week.
The changes will see gradual cuts in the handouts to families where one partner earns more than £50,000. Anyone earning more than £60,000 will lose the payout entirely.
Instead of the Government paying parents less, people will be required to return the child benefit money by filling out a self-assessment tax return.
This will mean an estimated 500,000 people will have to fill out the form for the first time.
Patricia Mock, a tax director in Deloitte's private client services division, told the Telegraph: "If you have a standard family with 2.4 children and two married parents all living together then the system is reasonably straightforward.
"But it can get really bizarre. Take that straightforward family. If the parents get divorced and the children live with the mother who has a new partner, and that partner is the higher earner, then he gets (to pay) the clawback even though they are not his children.
"Part of me thinks we are just making up really complicated scenarios for amusement's sake but it will happen."
The same will happen where a father claims the benefit for children who live with their mother but has a new partner who earns above the threshold.
A Treasury spokesman confirmed to Sky News that cohabiting couples will be treated in the same way as married couples and those in civil partnerships.
She added: "The unprecedented scale of the deficit has meant that the Government has had to make tough choices to reduce public spending; but we have always been clear that those with the broadest shoulders should carry the greatest burden.
"In a period when the Government is having to reduce welfare spending, it is very difficult to justify continuing to pay for the child benefit of the wealthiest 15% of families in society."
Cathy Jamieson, Labour's shadow Treasury minister, said: "With just a few weeks until hundreds of thousands of parents lose every penny of their child benefit, it is becoming ever clearer that David Cameron and George Osborne simply haven't thought this policy through.
"The chaotic way it is being implemented looks set to be yet another example of this Government's incompetence."