Another fine mess | 28 October 2010

You know that child benefit cut for higher-rate taxpayers? Yeah, well, it may not be quite as straightforward as the government have hitherto indicated. In an important post on his Wall Street Journal blog, Iain Martin sets out a problem that is exercising nerves and minds in the Treasury: simply put, there’s no existing method for establishing whether mothers (who receive child benefit) are living in a household which pays tax at the higher rate. In effect, this means that the policy is “unenforceable” – although there are some possible solutions, as Iain points out:

“I hear that ministers are considering (and tell me which part of the rest of this sentence might provide cause for concern) ‘a new government database’ to try and match up mothers with their partners. In theory it would enable cross-checking of the child benefit claims of mothers with the national insurance numbers, tax codes and addresses of fathers/husbands/partners.