Parents: are you going to be worse off?

Higher earners with families will see their child benefit cut, or scrapped altogether, from January 2013. Johanna Gornitzki reveals why the changes could be a complete disaster.

In tough times, cuts have to be made. And now it's time for higher earners with families to feel the pinch.

From January, all families where one parent earns more than £50,000 a year will see their child benefit cut or scrapped altogether.

If you have three kids this means a loss of two-and-a-half grand.

While the cut may be necessary, the way it's been sketched out is appalling.

For a start, no one will actually have their child benefit withdrawn. Instead, payments will continue as usual and then affected families will have to repay it through a tax return.

It will also affect all households where a higher earner is the sole provider. This ridiculous quirk means child benefit will be completely removed from some couples who jointly earn £60,000 per year but not from others whose income is nearly twice that.

And, stupidly, high earners living with a single parent who gets the benefit will also have to repay it through their own tax return – even if they aren't making any financial contributions towards raising the child.

It's a mess and unless HMRC sorts it out it, it will become a massive scandal.