For years, it has been abundantly clear this country’s child benefit scheme isn’t fit for purpose.
To start with, there is an ill-thought-out cap that is fundamentally unfair. It means couples with a joint income of £98,000 can claim the perk.
Yet families where one person earns £60,000 get nothing — even if they are a single parent or their partner doesn’t work.
Losing out: The taxman has been appalling at informing families how the tangled child benefit scheme system works
The cap has also been frozen for nearly a decade, despite wage growth and rising inflation, which means more and more families are losing this vital support.
Then there is the fiendishly complicated way that the scheme is administered.
Those who earn between £50,000 and £60,000 are only entitled to part of the benefit — and so must repay some via the not-so-catchily-named High Income Child Benefit tax charge, or HICBC. This involves the often tedious task of filling in a self-assessment tax return.
And even families where one person earns more than the cap are not always able to simply opt out of receiving the payments.
This is because in cases where one partner does not work, continuing to claim child benefit allows them to accrue national insurance credits which will count towards their state pension.
But again, this money must then be repaid via self-assessment.
To make matters worse, the taxman has been appalling at informing families how the tangled system works.
Relying on leaflets handed out in maternity wards and an assumption that everyone reads the newspapers is just asking for trouble.
So is it any wonder that hundreds of thousands of parents have ended up making costly mistakes?
And because HM Revenue & Customs (HMRC) has been so slow to pick up on these errors, many have then been landed with shock bills dating back years, along with colossal fines.
It has now emerged that the tax office has been given the legal authority to examine the financial records of 170,000 families that it believes wrongly claimed the benefit.
Such powers are usually reserved for investigating the most grievous tax offences, rather than hounding struggling families.
Yes, parents who are not eligible for the support must repay what they owe, otherwise it is not fair on those who did the right thing.
But is it really necessary to use such heavy-handed tactics, when many may have had no idea they’d overclaimed?
A thorough overhaul of this broken system is long overdue.
Meanwhile, as we report, HMRC might want to consider diverting a little more attention to raising awareness of the nearly £3 billion of tax-free childcare support parents are missing out on — not to mention the millions of child trust funds that have never been claimed.
Not again, Klarna
Buy-now-pay-later firm Klarna was forced to issue a grovelling apology last week after encouraging customers to cheer themselves up by going on a debt-funded shopping spree.
‘Stuck in a post-Christmas rut? Or perhaps you’ve got the January blues? Don’t fret — we’ve got some new and excited retailers guaranteed to put a spring in your step,’ the newsletter read.
With household bills soaring and tax hikes around the corner, it’s an incredibly irresponsible message.
And while Klarna has said it is investigating the gaffe, it is worth pointing out this is not its first offence.
In December 2020, Money Mail revealed that Klarna was being investigated by the advertising watchdog after it paid glamorous social media stars to promote buy-now-pay-later credit as a way to feel better in the pandemic.
The sooner these firms are regulated, the better.
Regular readers may remember that my final column of last year featured ten money-saving resolutions for 2022.
Number two was to be ultra-organised and buy Christmas paraphernalia in the January sales. Consider it done.
Bumper rolls of festive wrapping paper are going for 20p a pop in M&S — down from £6. And I’d thought my 74p gift tags from WH Smith were a bargain!
Just nine resolutions to go . . .
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