The Chartered Institute of Taxation (CIOT) has welcomed a government decision not to penalise parents who opt of out receiving child benefit in order to avoid a tax charge when new rules come into force in January.
The government said that parents will be able to claim the benefit if their income subsequently falls.
From January, any household where at least one person earns more than £50,000 will have the benefit reduced or stopped.
Under the plans, the government will still pay the child benefit but will then claw it back through a “high income tax charge” on people’s earnings. Around a million letters will be sent out later this week by HMRC to people who might be affected by the change.
The CIOT said the amendment to the draft legislation on child benefit will provide a “safety net” for those households that expect the higher income partner’s income to exceed £60,000, ask not to receive child benefit, but unexpectedly have income of between £50,000 and £60,000.
Patrick Stevens, president of the CIOT, which has been campaigned for the change to the child benefit rule, said: “There has been extensive confusion over the new child benefit charge, partly because of the way the legislation has been produced and partly because of the options available.”