Tax Codings (Widows)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 24th March 1977.

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Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey 12:00 am, 24th March 1977

asked the Chancellor of the Exchequer if he will instruct the Inland Revenue to check the 1977–78 tax codings for widows with children.

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

I assume that the hon. Lady is concerned about the adjustments relating to child benefits. All inspectors in charge of tax offices were reminded on 4th March of the need to see that the existing instructions have been correctly carried out.

Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey

I am grateful for that reply, but is the Financial Secretary aware that there is still a chaotic muddle in the minds of many people whose tax advice was sent out before 4th March and where errors have been made over the reduction of child tax allowance at the time of the introduction of child benefits? Will he ensure that when the second reduction is made—if it is made—in child tax allowance next autumn, the tax codings that go out, particularly to widows, are unequivocal and tell them exactly what their financial situation will be for the following year?

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

About 5½ million code changes were involved and reminders have been sent by the Inland Revenue. It has ensured that all reasonable steps have been taken to ensure that widows receive their correct code numbers before 6th April. The instructions have been sent and there will be little difficulty. The operation has been complex. By the time we come to the next change, we shall have had experience and that should remove the problems that arose on the first occasion.

Mr. R. C. Mitchell:

Is my right hon. Friend aware that a widow, or a family, with a child over 19 years of age who is still at school does not qualify for the child benefit allowance but has the child tax allowance reduced anyway? Does he agree that they are net losers? What is he going to do about it? He said that only a few people are involved, but there are 3,500 such people in the country. What is he going to do about them?

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

There have been some changes in the educational grants. We must understand that in the change-over from child allowances to child benefits there are a number of transitional problems with which we have had to deal. In the main, we have dealt with them satisfactorily.

Photo of Alan Beith Alan Beith Opposition Whip (Commons)

Is the right hon. Gentleman aware that it is deeply distressing to the widows involved to receive £1 child benefit for their child and then to find that that sum is taken away from their pension? Is he aware that they then have to haggle with the Inland Revenue to ensure that they are not taxed on the money that they have never received, and that that causes deep personal distress?

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

I must remind the hon. Member—[HON. MEMBERS: "Your hon. Friend."] The House will know that all of us, irrespective of party, have friends situated in all sections of the House. I remind hon. Members that the new child benefit scheme comes into operation on 6th April. No one is out of pocket at the moment and no one can be out of pocket until the scheme starts its operation. I hope to try to ensure that nobody will be under any misunderstanding about the Government's intention, and instructions have been sent out to that effect.

Photo of Mr David Howell Mr David Howell , Guildford

Is not the whole story of the child benefit scheme a dismal tale of incompetence, of which this is just one more aspect? Does not the Minister recognise that to those with children over the age of 19 in full-time education it is not good enough to say that something will be done later, because they will have to pay a revised scale in the new academic year? Does he agree that this is yet another area where a higher standard of competence and efficiency is required?

Photo of Mr Robert Sheldon Mr Robert Sheldon The Financial Secretary to the Treasury

I understand that the hon. Member is not opposed to the change from tax allowances to cash support for mothers. We have not had notable support for this important change, which has immense social consequences. The change has been valuable and it will be seen to be valuable. During the transitional stage I hope that we shall be able to carry the House with us until the final stages, when support to a mother for her child will be regarded as a normal arrangement.