This comes from the Telegraph, this morning:
The Institute of Chartered Accountants for England and Wales said high earning families, who would be seen by the Conservatives as their core voters, will receive big tax bills weeks before the expected general election in May 2015.
The reason is (and I have edited this slightly to give it more sense):
This is because the first full year of the changes in tax benefit for high is 2013/14, and the deadline for people to fill in their tax returns for that year and pay any tax owing is most likely 31 January 2015.
The changes in benefits forced 1.1million people who lived in a household where an earner was paid more than £50,000 a year to opt out of the system by last Sunday night, or agree to repay the benefit through the tax system in the future.
Most have not opted out of receiving the benefits and so many will have bills of well in excess of £1,000 due only a few months before the general election, having also been forced into filing tax returns for the first time or face penalties.
As the Telegraph noted:
Last night Tory MPs, including a former Coalition minister, described the change as a “ticking time bomb” which could damage the party's chances of winning a clear majority at the next general election.
Self inflicted too.
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I’m sure they can use ‘implementation problems’, such as lack of hmrc staff, to postpone the bills for 12 months or so.
I imagine there will be some high earners who are prepared to sacrifice their right to child tax credits in order to make their contribution to the country’s financial constraints, but I do not understand why couples each earning say £49,999 pa with a household income of almost £100,000, will not be drawn into this net. Perhaps those earning between £50,000 and £99,998 will start to employ their partners as a secretary/PA.
An individual earning £83,860 already pays as much Income Tax and National Insurance as two individuals earning £50,000 each. If you look at the situation where one person earns £100,000 that individual will pay around £7,000 more Income Tax and National Insurance than a couple earning the same amount between them, so there is already a big difference in the outcome for two households with the same income.
In fact for a single individual to end up with the same amount in their hand as a couple earning £50,000 each that individual would need to earn £117,277 per year and that doesn’t allow for the change in child benefit. If the individual had 2 children he/she would need to earn £120,300 to be in the same position as two earners on £50,000.
I would suggest it would be fairer to allow a parent that is not a higher rate tax payer to claim the benefit. That would at least go some way to addressing the major imbalances created when allowances and basic rate bands aren’t used.
I feel we should be celebrating on all fronts. More revenue for government use, coming from the fat cats who least deserve it!