MSE News: Higher rate tax payers to lose child benefit

keithnic_2

gauly wrote: »

You will have to earn about 2.5x whatever your child benefit entitlement is in order to take home more pay (assuming taxes at about 40%). Probably worth putting it into a pension until considerably over that rather than receive a few extra pounds benefit.

I would guess a large percentage of top rate tax payers earn between £44k and £50k and will now be getting bigger pensions (and paying less tax). Is it just me who is thinking that this policy isn't going to save nearly as much money as the chancellor reckons?

Would it be 1.7 times? i.e. if I earn £44k, then the next £4k in earnings I would take home £2,400 which is equivalent to what I'd lose in child benefit for three kids. Anything over £48k and I would be taking home more than I was losing.
The "marginal" tax rate for earning just over the £44k point and having several children is simply punishing. Basically its a 100% tax rate from £44k to £48k. What is the point in working hard, taking more responsibility and aspiring to earn more?

itsgottogetbetter

sh1305 wrote: »

A mortgage is a choice and your debts aren't the governments problem.

hahahaha.. yes thats right... a mortgage is a choice... a choice to work hard to pay towards something you will own!

You really are sanctimonious arent you???!

House prices have been so high.. yes people have maybe overstetched surely that is better than the option of doing not anything and letting the government pay your rent!

I dont know your background or story but as you maybe dont know anyone elses maybe time get off your high horse!!

The government are not doing this fairly.. maybe thats where your criticism should be!

bec2012

sulkisu wrote: »

I am not suggesting that parents should be paid by the State just for being parents and as I said in my previous post, I am in favour of the proposed changes in principle, but aren't you assuming (incorrectly) that all two-parent one income families, have 'chosen' to rely on one income? Depending on where you live and what you do, childcare costs (even for just one child) can wipe out a second salary, which means that for some families it makes financial sense for one parent to stay at home.

I am expecting a baby early next year and fortunately, I can afford to support the household while my partner stays at home with the baby. I can also afford the £300 p.w. full-time childcare costs if we chose to go down that route, but that's on a salary of £70k. Few higher rate tax payers earn this much.

I too had to give up work once we had a second child, my husband would have had to add to my wages to cover the childcare. Sadly my other half doesn't earn 70k, I'm slowly going back to work as the children get older spend longer at school, and can walk home on their own etc and 2013 gives me a bit of time, they will just have to be latch key kids

Indie_Kid

itsgottogetbetter wrote: »

The government are not doing this fairly.. maybe thats where your criticism should be!

Why is it not "fair"? The government are taking child benefit from those who don't need it.

itsgottogetbetter

of course its not fair!!! If it was fair its would be done on household income....

How can you say two people earning 43k get it and one person earning 44k wont is fair????!!!

gauly

keithnic wrote: »

Would it be 1.7 times? i.e. if I earn £44k, then the next £4k in earnings I would take home £2,400 which is equivalent to what I'd lose in child benefit for three kids. Anything over £48k and I would be taking home more than I was losing.
The "marginal" tax rate for earning just over the £44k point and having several children is simply punishing. Basically its a 100% tax rate from £44k to £48k. What is the point in working hard, taking more responsibility and aspiring to earn more?

Yep, sorry, you are right! You have to earn 1.7 times child benefit.

DirectDebacle

itsgottogetbetter wrote: »

of course its not fair!!! If it was fair its would be done on household income....

How can you say two people earning 43k get it and one person earning 44k wont is fair????!!!

Fairness seems to be rather subjective. Cast your minds back to the abolition of the 10p tax rate under the previous administration.

As a result of that around 5m people were worse off. They earned gross around 12k a year or less. Of course those on higher earnings were significantly better off as a result and probably thought the change was fair and right that the poor should subsidise their lower taxes.

The govt tried to put this right by increasing the personal allowance which pulled some of the lower paid back to where they were before the change and the remainder were still worse off. It also ensured the winners won even more, by several hundreds pounds. I expect they thought that this was even fairer.

Seems odd to me that people who gross around £850 pw and have a kid seem to think losing £20 pw is a financial disaster and so unfair.

But then I am just being subjective.

bh01

This change could be fun to implement. My income/tax and my wife's aren't linked but with this change they'd have to be. I guess a bit like in the old days of married person's allowance.

The diabolically complex child tax credits could be a mechanism to administer it but it's a beurocratic behemoth that needs culling or simplifying - maybe by becoming a line in the tax code calculation. I suspect that the government has plans for that so doesn't want to tie this change into the tax credits system.

As grumgrum says, maxing out on salary sacrifice is going to look attractive I think if your employer offers it. But there could also be some dodgy/interesting deals done in the background by some people with employers -maybe deferring annual pay rises.

Another method that works out the same on average would be to keep child benefit as a universal benefit but increase the higher rate income tax rate a tiny bit. For the really big earners they'd be worse off. For people just over 44k they'd barely notice it. Fairer, but guaranteed to get more opposition in the media.

geri1965_2

I see the Tories have already got people at each other's throats over this issue.

Divide and rule - can't you see what's going on? This is the thin end of the wedge.

WASHER

http://www.guardian.co.uk/politics/2010/oct/04/george-osborne-under-fire-welfare

This article from the Guardian is saying the cap comes in at 42,375 as it changes in April 2011.

Any ideas which is the correct figure.

WASHER.x.