MSE News: Higher rate tax payers to lose child benefit

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Child benefit is to be stopped for all higher-rate taxpayers from 2013 to help pay for a massive overhaul of the welfare system, Chancellor George Osborne announced today ..."

Read the full story:
Higher rate tax payers to lose child benefit

Butterfly_Brain

About time too.

Child benefit was originally brought in to help to feed and clothe the poorest families - it was paid to Mothers so that Fathers didn't drink it up the wall.

danielanthony

The reports say that higher rate tax payers will loose this benefit but the cut off figure banded around is £44,000

http://www.bbc.co.uk/news/uk-politics-11464300

The higher rate tax band starts at £37,400 (http://www.hmrc.gov.uk/rates/it.htm) so if you earn over this you are a higher rate tax payer, where did the £44,000 number come from?

king100

Oh well I feel really sorry for those people earning over 44k who wont get any child benefit. NOT.

He said he didnt want to make it complicated, it should be on the household income not 1 individual.

On the radio a lady whos income was 45k, and thats the household wouldent get it, but her friend whos household takes 84k would.

Personally if I was on 45k I would take a pay cut to £43999 and you would be about 2k better off after tax.

sulkisu

I agree in principle (despite the fact that I will be affected), but to be truly 'fair' it should be based on household income and not individual income. Under the proposed system if you are a single parent houselhold or a single wage household, and that person earns £44k, that family will lose their child benefit. However a two-parent/two wage household where each parent earns 4£3k, will continue to receive child benefit despite a household income of £86k.
It should also apply to those families who are either solely or partially reliant on benefits (including tax credits), whose total benefits package exceeds £44k. In London, housing benefit payments (dependent on the size of the property), can easily exceed £400 p.w. Once you add all of the other 'often uncalculated benefits' such as free school meals, free school uniforms, free dentists, free eye care, plus the cash payments (e.g. income support, esa, etc), and not forgetting csa payments, which are now disregarded for benefits purposes and could run in to thousands per annum, I suspect that many families on benefits will have incomes which exceed £44k (not including their child benefit), all of which is tax free.
The idea that they will continue to receive their child benefit, while someone who works for the same income loses theirs, seems more than a little unfair to me.

Former_MSE_Guy

Unfortunately, HMRC does a very poor job at explaining tax thresholds. The £37,400 figure you refer to is the amount of taxable income charged at 20% tax. But before you get taxed, most people have a personal allowance of £6,475.

So, for most, the first £6,475 of income per year is not taxed and the next £37,400 is taxed at 20%. So only once you get over £43,875 (6,475 + 37,400) do you pay higher rate tax at 40%.

danielanthony wrote: »

The reports say that higher rate tax payers will loose this benefit but the cut off figure banded around is £44,000

http://www.bbc.co.uk/news/uk-politics-11464300

The higher rate tax band starts at £37,400 (http://www.hmrc.gov.uk/rates/it.htm) so if you earn over this you are a higher rate tax payer, where did the £44,000 number come from?

Badger_Lady

I'm just about in the higher rate bracket (although I don't have kids) and I also agree with the idea. If you can comfortably afford to start a family, you don't need the additional.

However it would be harsh if I got knocked up tomorrow and the Dad wasn't interested: I can comfortably afford to look after myself as a singleton but it all goes balls up when maternity leave starts...

hermanmunster_3

Have 2 kids and pay loadsa tax. Nice to get SOMETHING back from the treasury. about 3.9% of what I pay in - but it is the thought that counts.

THRIFTY_GIRL

Another attack on the middle classes. This is what the real Tories are about. As someone has already mentioned, what about those on benefits who receive more than the working classes?

I have for a long time felt that benefits need to be limited to a maximum, regardless of the number of children. My personal opinion is to cap benefits at 3 children; this would result in the scroungers having fewer children IMO; no more Daily Mail stories about 12 kids. Why don't they take such action? Because it will lose them votes...

How is it fair that someone earning £43k receives the allowance and someone earning £44k does not? The person on £43k is better off....

Talking about simplifying the system, why not combine Child benefit with Child Tax credits? That way the benefit could at least be tapered and there would be no need for a new system. This would also remove the unfairness resulting from whether there is one income earner or two. Savings would be made by getting rid of child benefit altogether, renaming it as an extension to the tax credits system.

I think this scheme will lose more than a few votes. The suggested scheme is too simplified and unfair.

picardygirl

We will lose out in 2013 when they stop child benefit for the 40% tax earners, as my OH is a higher rate tax payer, cant say i'm happy, but acknowledge the government need to make major changes. But where is the sense .... that if mum and dad both earn £43 k each they are still eligible for family allowance, that makes no sense whatsoever!

A few years ago we used to get £45 a month tax credits this stopped (fair enough) when we reached a certain joint income limit, and we had to pay back a slight overpayment (again fair enough), so why can child benefit not be worked out the same, ie on a household joint income, as tax credits?

commutergirl

I agree that cuts need to be made somewhere, but it seems to be hitting the middle classes significantly worse than other people. The very people who are lucky enough to have a job and not have to rely on benefits but not rich enough to classed as well off and manage to live comfortably not extravagently.

I am not a higher rate eaner so it won't affect me, but I do think it is unfair that it is based on a single person rather than household income. I really do not see how you can penalise a family with one person earning for eg £45k by taking away their child benefits, but yet still pay to a family with 2 earners of £43k each. Both are paying into the tax system so why the anomaly?