Accountants warn child benefit cuts could break EU law

The Government’s decision to cut child benefits breaks European laws by discriminating against Britons, according to the Institute of Chartered Accountants in England and Wales.

In the March Budget, Chancellor George Osborne (pictured) announced the Government is cutting child benefit payments for families where there is one person earning over £50,000.

Families with a wage earner with a salary of £50,000 or more will lose 1 per cent of the benefit for every £100 they earn over the new threshold.

Families with a person earning over £60,000 will not receive any of the benefit.

According to the Telegraph, some European Union citizens working in Britain will not have their payments reduced, leading the institute to brand the move “discriminatory”.

It says under the new rules, the money will still be paid to families but will be clawed back through a tax charge on parents’ earnings.

ICAEW tax facility chairman David Heaton told the Telegraph the decision to recoup child benefits through the tax system will expose the coalition to legal challenge.

He says: “You could find yourself in a British office, sitting next to a colleague from elsewhere in Europe who is paid the same as you, has the same number of children as you and is receiving benefits for them, but who is not facing the same tax charge from HMRC as you. That is discriminatory.”

Heaton says it would be “virtually impossible” for ministers to extend the tax charge to migrant workers as HMRC lacks access to the information about foreign workers’ salaries it would need to calculate the charge.

The Government told the Telegraph yesterday that Whitehall lawyers are confident the child benefit changes are permitted under EU law and that any legal challenge would fail.

A spokesman says: “We are clear that this legislation is fully compliant with EU law. Anyone who receives or whose partner receives child benefit in the UK and is resident for tax purposes will be liable for the charge whether they are a UK citizen or a migrant worker.”

Source:Paul Toeman

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