Another one of those benefits threads

misskool

can not all child benefits be offset against a parents tax-free allowance?

Where I am from, you get a tax-free allowance (after your personal allowance) then you get x amount per child until 16 then x amount until they finish higher education. Then there wouldn't be a multitude of government departments trying to administer x, y, z benefit. Can all be done on the PAYE system or when you file a tax return and get the money back.

Surely, the administration of benefit when you've paid the tax costs a lot more?

lemonjelly

misskool wrote: »

can not all child benefits be offset against a parents tax-free allowance?

Where I am from, you get a tax-free allowance (after your personal allowance) then you get x amount per child until 16 then x amount until they finish higher education. Then there wouldn't be a multitude of government departments trying to administer x, y, z benefit. Can all be done on the PAYE system or when you file a tax return and get the money back.

Surely, the administration of benefit when you've paid the tax costs a lot more?

Racist!;)

Seriously, a good & interesting point.

OT - misskool have you seen the proposals to increase the costs of student loans to head off a crisis in HE?

lemonjelly

drc wrote: »

The problem is that the welfare state no longer pays out to those in "genuine need". Seeing by the numerous articles that are posted on this site of families who are not necessarily in genuine need but have more and more kids in order to maximise their benefit gain I no longer believe that the welfare state is doing what it was set out to do.

The above is more a problem with people who claim (specifically those who claim fraudulently), rather than a problem with the system. I feel that the system has fallen behind those who are abusing it at every opportunity.

I do think however that virtually no-one thinks "I need more money, I know, I'll pop out another sprog!" This appears to be a myth held valuable by people on message boards.

AFTER having the child, the parents will then utilise that child in order to maximise their income.

We are then on a sticky wicket. In example, this site advises people to use their children for tax free higher rate savings. Is it not arguable that this is a form of evasion/avoidance?

Problem is, the genuine claimants are the most likely to lose out...

lostinrates

lemonjelly wrote: »

The above is more a problem with people who claim (specifically those who claim fraudulently), rather than a problem with the system. I feel that the system has fallen behind those who are abusing it at every opportunity.

I do think however that virtually no-one thinks "I need more money, I know, I'll pop out another sprog!" This appears to be a myth held valuable by people on message boards.

AFTER having the child, the parents will then utilise that child in order to maximise their income.

We are then on a sticky wicket. In example, this site advises people to use their children for tax free higher rate savings. Is it not arguable that this is a form of evasion/avoidance?

Problem is, the genuine claimants are the most likely to lose out...

Although I appreciate your differentiation between the system and the fraudulaent users of the system, a system open to wide scale abuse could fairly be called a little flawed.


I also think agree I can't imaging anyone timing babies for financial reflief: but magine if/where it happens it would be some don't prevent pregnancies the in expectation someone else will pick up the slack. Its very different, the former being calculating usage of the system, the latter I think could be classed a victim of the the system (perhaps another flaw?).


I think if usage of childrens' things for avoiding (its not AIUI evading, mse dislikes illegality) tax were not an option then it couldn't happen.

Why genuine claimants are losing out is also a potential flaw in the system!

lemonjelly

lostinrates wrote: »

Although I appreciate your differentiation between the system and the fraudulaent users of the system, a system open to wide scale abuse could fairly be called a little flawed.

No disagreement at all lir. that's why I say the system has not kept pace with those who bend the rules.

Longer term, I believe/hope conditionality will go some way to address the situation. That needs to happen sooner rather than later though.

LydiaJ

misskool wrote: »

can not all child benefits be offset against a parents tax-free allowance?

Where I am from, you get a tax-free allowance (after your personal allowance) then you get x amount per child until 16 then x amount until they finish higher education. Then there wouldn't be a multitude of government departments trying to administer x, y, z benefit. Can all be done on the PAYE system or when you file a tax return and get the money back.

Surely, the administration of benefit when you've paid the tax costs a lot more?

If I have understood you correctly, then that would only work for parents who are tax payers. I do agree that for parents who pay more in tax than they claim in benefits, there are obvious advantages to letting them keep the money in the first place rather than taking it away and then giving it back.

However, what about the parents who don't earn, or don't earn over the income tax threshold, or don't earn very much over the threshold so that the benfits they claim are more than the tax that they pay?

Any system has to be able to deal with both categories of parent in a coordinated way, so that there isn't some huge discontinuity when you move from one category to the other. The present system, IMO, doesn't do this. It sounds as though it does - any earnings over X create a deduction of 38% of the excess from CTC/WTC. However, when you consider that the person will also be paying 20% income tax and 11% NI, that means they only get to keep 31% of their extra earnings. If the job entails travel or clothing costs, or the person's entitlement to council tax benefit or free prescriptions or something also changes, then it's very easy for working not to be worth it.

wageslave

I have to agree with FC here, at one point in my life I was desperate for Mondays, I really seriously needed CB to survive. I think it was about 15 quid and it bought a power card and some food.

I didn't have to apply for it or beg any fu cker to give me it, it just came.

I would be extremely cross if CB disappeared, there are umpteen thousand decent mothers still out there desperate for Mondays

misskool

lemonjelly wrote: »

Racist!;)



OT - misskool have you seen the proposals to increase the costs of student loans to head off a crisis in HE?

I'm a bit more worried about HEFCE funding from 2011, last I heard, the Lib-Dems were planning to abolish it.
The students loans will be the least of a university student's worries if there is no HEFCE funding.

misskool

LydiaJ wrote: »

If I have understood you correctly, then that would only work for parents who are tax payers. I do agree that for parents who pay more in tax than they claim in benefits, there are obvious advantages to letting them keep the money in the first place rather than taking it away and then giving it back.

However, what about the parents who don't earn, or don't earn over the income tax threshold, or don't earn very much over the threshold so that the benfits they claim are more than the tax that they pay?

Any system has to be able to deal with both categories of parent in a coordinated way, so that there isn't some huge discontinuity when you move from one category to the other. The present system, IMO, doesn't do this. It sounds as though it does - any earnings over X create a deduction of 38% of the excess from CTC/WTC. However, when you consider that the person will also be paying 20% income tax and 11% NI, that means they only get to keep 31% of their extra earnings. If the job entails travel or clothing costs, or the person's entitlement to council tax benefit or free prescriptions or something also changes, then it's very easy for working not to be worth it.

Sorry I forget that not everyone here has to file a tax return. We have to do it and declare we haven't earnt enough to pay tax (I think you start when you're 18). So they deal with it there. So it's like a tax refund?

Perhaps it's a good thing I'm not a government benefits policy advisor

sjaypink

shellsuit wrote: »

They are ~ unless the married/co hab couple of both working full time on a good wage.

The rental prices now are shocking and I suppose that's all because a LL knows that if the person is entitled to LHA, they will have all that rent paid for them.

I know of LL's who, for example, have properties up @ £500 a month. But when they know the tenant is on LHA, the price goes up to £700, because they know LHA will pay that amount.

Rental prices stink for working people, and especially single working people.

Yes but working couples (either one or both) and working singles can claim hefty amounts of LHA/HB too.

I get to see a lot of peoples financial cirumstances day in day out, and I can honestly say there is nothing I have seen which makes me think singles are partiularly better off. I am happy to be proven wrong

The only way a single parent would be much better off is down to the recent changes in maintenance disregard (which is imho a shocking move, and most likely something which will be reversed prtetty soon anyhow) but, tbh this seems to be something which doesn't effect my opnion too much as most LPs get really quite small amounts of maintenance.

It seems obvious to me the real problems with our system are:

LHA. Awful. Will try not to rant now

Huge differences between 0 or 1 child people or couples compared to those with loads of kids.

Abuse of tax credits system by the 'self employed' :cool:

I honestly think the whole 'better off splitting up' theme is a red herring.