Martin Lewis is urging the Chancellor to fix some key consumer issues, including rules around child benefits that “unfairly” penalize some families with a single income or dominant breadwinner.
The founder of MoneySavingExpert.com and the Money and Mental Health Policy Institute wrote to Chancellor Jeremy Hunt ahead of the March 6 Budget, highlighting several areas of concern affecting parents, first-time buyers and mobile and broadband customers, among others.
Mr Hunt appeared as a guest on ITV’s Martin Lewis Money Show earlier in January, and when Mr Lewis pushed some key campaign points, the Chancellor’s response was to ask Mr Lewis to write to him.
Among the concerns, Mr Lewis highlighted high-income child support charges. Tax charges are imposed when a parent in the household claiming child support has a taxable income of £50,000 or more.
Mr Lewis’s letter says: “The high-income child benefit charge unfairly penalizes single-income families.
“This was by far the biggest topic the public asked me to raise with you. In our interview, I read a question from Alan highlighting the unfairness in the way in which child benefit gains are withdrawn based solely on a parent/guardian’s income up to £50,000 (It clears at £60,000).
“My son’s partner tragically passed away 34 days after the twins were born. My son has got a new job that now pays him £60,000 and is struggling with the costs of living and mortgage payments after losing a second income. HMRC asked him to repay child benefit. This seems wildly unfair as a couple can bring in nearly £100,000 but a single breadwinner loses out as soon as they earn more than half that amount. Are there any plans to change this?
“I can see a few people arguing that it is right for Alan’s son’s family to lose child support even though their total family income is lower.
“I was very pleased that you accepted that there is an ‘injustice’ in the structure that punishes single-parent families, single-parent families, and families with one dominant parent.”
“While I agree, as I have indicated, that there are many structural problems in the tax system, this problem is exacerbated by the fact that the £50,000 (and £60,000) thresholds have been frozen since 2013.”
The letter also urges Mr Hunt to remove the Lifetime Isa (Lisa) withdrawal penalty for first-time buyers.
“You can only use Lisa on a qualifying property, which is worth up to £450,000,” she says.
“This £450,000 limit has remained frozen since Lisa launched in 2017. Average house prices have risen by more than 30% in that time.”
The letter notes that in many London boroughs, first-time property buyers cost more than £450,000.
“To withdraw for any purpose other than purchasing a qualifying home (or as of age 60), you pay a 25% penalty,” the letter says.
“For many, who saved in Lisa and now find themselves out-charged because the price of the home being purchased is above the minimum, they have to pay a 25% penalty to withdraw their money.”
In the letter, Lewis also calls for action to address the mid-decade rise in broadband and mobile phone prices, rising above inflation, and to regulate the buy now, pay later process for businesses to be brought in as soon as possible.
A Treasury spokesman said: “Martin is a fantastic champion of consumer rights and, as always, we thank him for his suggestions following the Chancellor’s appearance on the Martin Lewis Money Show.”
“The cost of living is a concern for many, but our decisive action helped cut inflation by more than half last year while delivering one of the largest support packages anywhere in Europe.
“We are also supporting low-paid workers with a record rise in the national living wage and tax cuts so people can keep more of what they earn.”