Child benefit

I agree. Is there really not a single journo out there who has done the tiniest bit of research, enough to be able to bother to counter this.

Or perhaps they do know, but aren't too happy about having their child benefit taken away so are just shit-stirring?

My other bug bear is the idea that people who earn £50,000 or £60,000 are not up to the job of understanding the changes.

I don't have kids and earn half that and, agree with it or disagree with it, as plain as day how it works and what needs to be done.

All in all, it is reminiscent of student fees and loans - all about mis- information and freaking people out rather than explanation and making it work to the best advantage for the individual.

There was a time when all higher rate taxpayers were within self-assessment. But there was then a major effort to reduce the number. A large number of people were taken out - nearly a million in

2007-8 and 800,000+ in 20088-9. Typically they were people with one stable employment (or pension) which could all be dealt with through PAYE with adjustments to codings to collect any underpayment computed from the employers' EOY returns, and with not enough income to be into complicated stuff like share options, chargeable gains, VCT investments etc. Investment income, deductions (eg gift aid) etc could also be dealt with through coding adjustments and occasional enquiries. ISTM those are very much the sort of people in the frame to lose some - but not all - their families' child benefit.

Surely, most people with a decent income are going to have some interest on their savings.

Which is why I wrote that "Investment income ....could also be dealt with through coding adjustments and occasional enquiries." But a lot of the relevant ones won't have much: the crucial cohort have incomes of 50~60,000 and children which tends to go hand in hand with mortgages and not a lot of spare capital. Of course you don't have to believe some bloke on Usenet. It's all on HMRC's site. Or I see this morning that the same point is made in

How on earth does "occasional enquiries" work then?

If someone has an interest bearing savings account, or even interest bearing current account, they are going to be receiving interest on it every year.

How does asking them about it every five years get it right?

but that's another, potentially, ill-researched newspaper report

tim

now that I have read it, just appears to about the fact that the timing of the changes will have an effect on the Tory's re-election chances and has nothing at all to do with the point at issue

tim

Did you read the quote from Chas Roy-Chowdhury? I'll paste the relevant bit of it below:

"Over the last decade or so hundreds of thousands of people with straightforward tax affairs have been taken out of self-assessment. These are higher rate tax payers who generally only have Pay As You Earn (PAYE) and small amounts of investment income. This has been a very welcome simplification but now many hundreds of thousands will need to consider whether to put themselves back in to self-assessment."

Note especially the words "higher rate taxpayers" and "small amounts of investment income". So it seems to me very much on the point in issue.

In passing, Chas Roy-Chowdhury is one of the most experienced commentators on tax: he has has been at the ACCA for ages and is now head of taxation there.

You might say he must have been misquoted. But the same thing is, as I indicated, on the record on HMRC's site. It has also been covered extensively in the press in the past. See eg

Of course you are entitled to point out where I and others have misunderstood the position. I'll rest on what I've said.

No, I gave up before then :-(

OK you are right (and this is all new to me), but I have to say (as a fully paid up tax payer who does have to SA) that I am appalled that someone can have (say) 90K of income, taxed as PAYE and 9,999 income via savings interest taxed at source at 20%, and hence owe 1999 pounds in addition (higher rate) tax and not have to pay it.

Who came up with the grossly unfair system?

tim

Your instinct was right. The system would work better (in the sense of greater accuracy of tax payments) if everyone who is or might be a higher rate taxpayer made a return. But the cost of dealing with tax returns in our horrendously complicated system was too high, and MPs were getting too much grief from the increasing numbers of people who had make a return. And that was in the mid-noughties. With the further growth in HR taxpayers since then as the threshold's been reduced year by year I imagine HMRC and MPs would be swamped if every HR taxpayer had to make a return.

That said, your example is rather extreme.

First, the limits on earnings and investment income are just that. They don't entitle anyone to get out of SA and someone with both high earnings and high investment income probably wouldn't.

Second, if someone who was within SA had investment income of (say)

4,000 p.a. when they were taken out of SA then HMRC would adjust the PAYE code to collect HR tax on the 4,000. So even if investment income increased to 9,999 the tax lost (assuming interest under deduction) would be 20% of the difference not 20% of the total 9,999.

Third, HMRC get returns from banks, building societies etc of interest so they could well pick up the increased investment income and make enquiries - or just require a SA return again - outside the cycle of review.