Family allowance provisions therefore remained intact in the Family Allowances and National Insurance Act of Believing family allowance was not widely supported among its constituency, the Labour government of was unenthusiastic about the issue.
However, in , pressure groups especially the Child Poverty Action Group forced it to address family allowance. Cabinet debated the respective merits of an increase in the existing family allowance, or a new means-tested family supplement that was supported by the Chancellor, James Callaghan.
In , the Cabinet endorsed a nominal increase for the fourth child, prompting the Minister of Social Security, Margaret Herbison , to resign. A general increase in family allowances was agreed for , but it was funded out of the family tax allowance. This 'claw-back' of funds from higher-earning families proved politically unpopular. It was designed to replace further increases in family allowance with a means-tested supplement for the poorest families, and was in some ways similar to the scheme devised by Callaghan under Labour.
There was a low take-up rate of FIS, which proved unpopular, especially as it was accompanied by the withdrawal of subsidised milk for children by Margaret Thatcher 'the milk snatcher' as Education Secretary. The bill replaced family allowance with a benefit for each child, which Castle insisted was paid to the mothers. The act was not implemented immediately because of the economic crisis of the mids. Replacing tax allowance, child benefit was finally put into force.
All content is available under the Open Government Licence v3. Search the website Search the catalogue. Believe me, I understand that most higher rate taxpayers are not the super-rich. But a system that taxes working people at high rates only to give it back in child benefit is very difficult to justify at a time like this.
And it's very difficult to justify taxing people on low incomes to pay for the child benefit of those earning so much more than them. These days we've really got to focus the resources where they are most needed. We've got to be tough but fair. That's why we will withdraw child benefit from households with a higher rate taxpayer.
Child benefit would continue to be paid for all children, but would be clawed back from families containing a higher rate taxpayer from The announcement provoked strong reactions in certain sections of the media. Particular attention was focused on the perceived anomaly whereby single earner couples earning just over the higher rate tax threshold would have their child benefit clawed back, while dual earner couples each earning just below the threshold would keep the full amount.
The Spending Review published on 20 October confirmed that child benefit would be withdrawn from families with at least one adult paying higher rate income tax, from January Your continued use of revenuebenefits indicates your consent to our use of cookies. Please read our privacy policy , about the use we make of the information you provide to us.
Web design by MID. Legislation vs practice Making a claim How to claim Backdating Protective claims Entitlement WTC elements CTC elements 2 child limit policy Payments What is income The four steps Disregarded income Calculating tax credits income Employment income Pension income Income from self-employment or trading income Social security income Student income Investment income Property income Foreign income Notional income Miscellaneous income Real Time Information and tax credits Changes of circumstances Changes that must be reported to HMRC Bereavement Other changes How to notify changes Understanding the disregards Understanding childcare Who can claim Calculating costs Understanding disability Understanding couples Understanding self-employment Special circumstances Foster carers Domestic violence Overpayments and underpayments How much can your client get?
Capital rules Self-employment What counts as self-employment for UC? How much is the National Minimum Wage? Who is an eligible person? How much is Tax-Free Childcare worth? What are qualifying childcare costs? Where it all started Research and reports Public statistics Public consultations Policy changes Government Committees. Child Benefit and Guardian's Allowance: Where it all started Child benefit was phased in from to by Labour, replacing family allowances and child tax allowances.
Child tax allowances Child tax allowances were first introduced in , though they were abolished again in Family allowances Family allowances were the subject of a White Paper in , but there was disagreement among Labour and Conservative politicians about the way they should be implemented.
Child benefit Back in power, Labour had originally intended to merge family allowances and child tax allowances in the new benefit called child benefit in the mid s, but under financial pressure decided to abandon these plans. Recouping child benefit from higher rate taxpayers Neither the Conservative nor the Liberal Democrat General Election manifestos mentioned Child Benefit. However, in his speech to the Conservative Party conference on 6 October , the then Shadow Chancellor, George Osborne, had said: We will preserve child benefit, winter fuel payments and free TV licenses.
In his speech to the Conservative Party conference on 4 October, Mr Osborne announced that child benefit would also be withdrawn from higher rate taxpayers: We still pay over a billion pounds a year in child benefit to higher rate taxpayers. The family allowance was introduced at a rate of five shillings for each child after the first — Beveridge had wanted eight shillings — and was paid direct to the mother after a protest led by Rathbone and a free Commons vote overturned initial plans to pay the father.
Jim Griffiths, the Labour minister who led implementation of Beveridge's reforms, was later to describe the initiative as "one of the best investments the state ever made".
For more than 30 years family allowance was paid in harness with child tax allowance. This enabled governments to claw back increases from taxpayers, although the "wallet-to-purse" transfer was thought to have lost votes among male workers and to have cost the then Labour government dear after , when it more than doubled the family allowance but cut the tax break.
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