Family Law | Government Insists Child Benefit Reform Is Legal

The Government is pushing ahead with reforming child benefit amid claims that its plans to tax the benefit for higher earners will breach European anti-discrimination laws.

The Institute of Chartered Accountants in England and Wales (ICAEW) has said that an EU national working in the UK whose partner has substantial earning in their home country would still receive the benefit, while two UK citizens earning over the threshold would have their benefit cut. Under EU law, migrant workers are covered by their host country’s social security system, which determines family and other benefits.

As of 7 January 2013, households where at least one partner earns more than £50,000 will have child benefit reduced or stopped, but because the change only applies to earnings taxed in the UK, families with a high earner working abroad may not face any cuts.

However, the Treasury said that it had asked its own legal team to examine the concerns, which the ICAEW brought up in April, and they found that the charge was completely compatible with the UK’s Treaty obligations.

Also, according to the Treasury, 85 per cent of all families with children would be unaffected by the changes and would continue to receive the benefits in full.

In addition, the Chartered Institute of Taxation (CIOT) has now entered the debate and agreed that there were likely to be only a few cases of migrant workers claiming child benefit from another member state.

According to the CIOT, it is generally considered legitimate for a government to introduce laws that treat its own citizens less favourably. For example, there are tax concessions available to wealthy “non-domiciled” foreigners living in the UK, which are not available to UK citizens.

However, critics insist that the changes will make the system much more complicated particularly for very mobile families and that it will be difficult to enforce the policy across borders.

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Mackrell Turner Garrett Solicitors in London