TaxPersonal TaxChildren’s tax credit labelled ‘daft’

Children's tax credit labelled 'daft'

Privacy and confidentiality between married couples will be blown apart by the introduction of the new Children's Tax Credit which requires spouses to compare income levels, tax experts have warned.

Forms for the new credit, which comes into effect from 6 April 2001, have been sent by the Inland Revenue to taxpayers who previously claimed either the Married Couple’s Allowance or the Additional Personal Allowance.

Chantrey Vellacott tax partner Maurice Fitzpatrick said: ‘The new CTC breaches the confidentiality of the tax affairs of husband and wife, whilst in the case of non-married couples who claim CTC they will have to decide whether they are living together for this purpose.’

CTC is worth up to £442 for one or more children. It is withdrawn at the rate of £1 for every £15 by which the income of the claimant exceeds the higher rate tax threshold of £28,400. Around 750,000 people will have their CTC either restricted or eliminated altogether. And some 200,000 taxpayers will face a marginal rate tax or 46.6% on their next pay rise.

‘CTC is likely to prove complex and unwieldy in operation. It could yet prove to be one of the daftest pieces of tax legislation ever,’ Fitzpatrick added.

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