New rules are being drawn up to aid tax officials in clawing back child benefit from those with higher incomes.
In his Comprehensive Spending Review, Chancellor George Osborne announced mass spending cuts, and by scrapping child benefit for families with a higher-rate or top-rate taxpayer from 2013, the government will save £2.5 billion a year.
Those with a single earner paying the 40 per cent tax rate - which will start at just over £42,000 from next year - will lose the child benefit which they have been entitled to collect previously.
Households with two earners each below the higher-rate threshold - a possible joint income of more than £80,000 - will keep the payments, which are worth £1,700 a year for two children.
The new rules will undermine the long-established principle that individuals are taxed independently. Rules to allow for those who split, divorce or remarry are still being drafted, but experts are saying that financial transparency between partners who have split is unlikely.
Matt Coward, partner with accountant Price Bailey in the City, says, “Asking someone to sign off a tax return based on information from another person is just incompatible with the idea of independent taxation. You are depending on the Revenue to get your tax code correct and their recent track record is very poor.”
