MSE News: Higher rate tax payers to lose child benefit

ed123_2

......the original aim of benefits when the welfare state was set up was to help the poorest in society, how someone on £44,000 pa gets benefits when the average wage is £26,000 pa is beyond me....there is talk already that these "poor" people will get around the limits by making extra payments into their pension schemes.........ed

Armada_2

Kimitatsu wrote: »

Brilliant idea! Now if you can clothe my ever growing teenager (he is 13 and 5ft 9 and still growing like a weed) feed him a meal that will fill him up at lunchtime all the way until teatime for £20 a week including school pe kit, footie and rugby boots, blazer, tie, 5 shirts (because he is a boy and he smells) trousers, underwear, decent coat oh and shoes (currently he is almost a size 10 - thats an adults 10) I will forgoe the £20 a week I get in CB with glee. :T

Somehow though I dont think its going to catch on.........:rotfl:

Sarcasm shows the lowest form of wit and the lowest form of ignorance! :T:rotfl:

You make you make your case based on one child....how much, roughly, is coming into your household...and how much in total do you spend on feeding and clothing this child for school??.......Did your child cost the same amount pro rata aged 5.6.7.8?

You don’t think it’s going to catch on....lol :rotfl:.......It’s about to start in 2013 certain parents/carers not getting CB and what we know now is only one of the least bad announcments......wait and see!!

hiney777

1.2 million families saving £1 billion, sounds good until you realise that there are going to cap the benefits to no more than £26,000 per any family, and there are 50,000 of those.
50,000 x £26,000 = £1.3 billion
1.2 million hard working families whose children are helping to pay £1 billion
50,000 families costing the economy £1.3 billion

james_joyce

apcorbett wrote: »

What a rubbish way to do it...

All it will mean is that I won't do any overtime, which pushes me just over the 40% threshold (from next year, when it comes down to just under £43k), as it isn't worth losing the £2,444pa I get through child benefit...

Or, alternatively, I'll put money in to a pension, so that I am just below the 40% mark...

All it is doing is encouraging those at or around the higher level to make sure that they remain under else they lose the child benefit.

Am I right in thinking that someone earning £1 over the higher rate threshold, who has 3 children, will be paying an effective marginal tax rate (ie including the lost child benefit) of 244,960%? In principle I am in favour of redistribution but that does seem just a little bit drastic!

qetu1357

gauly wrote: »

Not necessarily! I've been doing a bit of maths based pretty closely on our family circumstances. I think I must have made some mistake. Can anyone tell me if I if I have gone wrong?? This is for a family with four children, with 6% pension payments and with just the husband working (in central London).

INCOME OF £44k WORKING IN LONDON

---

Net of pension/tax/NI £30,183
Season ticket to London -£4,028

Benefits £0

Total income £26,155

INCOME OF £19k WORKING LOCALLY

---

Net of pension/tax/NI £14,122

Child tax credits £9,112
Council tax benefit £53
Child benefit £3,154

Total income £26,441

I got the benefit levels from the entitledto.co.uk website. I was looking into this because it's looking pretty certain that my husband is going to lose his job next year but I think earning a low salary locally should not be difficult. I'm rather shocked to see that after the latest government plan we could actually be better off!!

Obviously the big drawback is the pension payments are smaller which is bad, but then it's not clear that a stay-at-home mother is going to get automatic pension qualifying years if she doesn't get child benefit, so even that might be better.

Incredible but true.

The "system" actively encourages people not to work or not to better themselves.

WASHER

sinstar wrote: »

HMRC website states the higher rate of tax is applicable to any earnings over £37,400. So if anyone in the household is earning over this amount they'll be paying higher rate tax so will lose Child Benefit.

http://www.hmrc.gov.uk/rates/it.htm

MSE Guy has already said in an earlier post 37,400 was incorrect as it doesn't include the personal tax allowance.

No-one at this stage seems to know what the cut off figure is, I'm trying to find out so I can pay more into my pension fund therefore I will not lose the Child Benefit. One would think it would be simple to find an accurate figure, simples it is not!

jlpike

Can i check my understanding on this.

I earn 42k but with car benefit my taxable pay is around £45k i.e £1200 above the 40% tax threshold. I have 2 kids who are looked after by my wife who works 2 days per week. I pay 2.5% pension on £42k = £1050 per year but will actually cost me around £800 net of tax therfore I am still a 40% tax payer.

Therfore to avoid losing £1800 child benefit I need to reduce my taxable salary by £1200.

A I can do this pay paying around £1440 into my pension per year.

B Join a salary sacrifice scheme for chilcare vouchers currently costing £2500 per year.

From previous posts I am fairly sure A is possible but what about childcare and if I go the pension route is it right I would have to pay 20% more than £1200 to reduce my salary by £1200 (i.e 1440)

Cheers

qetu1357

jlpike wrote: »

Can i check my understanding on this.

I earn 42k but with car benefit my taxable pay is around £45k i.e £1200 above the 40% tax threshold. I have 2 kids who are looked after by my wife who works 2 days per week. I pay 2.5% pension on £42k = £1050 per year but will actually cost me around £800 net of tax therfore I am still a 40% tax payer.

Therfore to avoid losing £1800 child benefit I need to reduce my taxable salary by £1200.

A I can do this pay paying around £1440 into my pension per year.

B Join a salary sacrifice scheme for chilcare vouchers currently costing £2500 per year.

From previous posts I am fairly sure A is possible but what about childcare and if I go the pension route is it right I would have to pay 20% more than £1200 to reduce my salary by £1200 (i.e 1440)

Cheers

Or agree with your employer to cut your hours so your income comes under the threshold.

WASHER

Jlpike, I have just read the HMRC, the company tax taxes are also rising which will affect you too as it will me. The Guardian are stating a figure of approx £42K and you will lose Child Benefit, Daily Mail are stating 37,401, other media are stating approx 44k. Until a definite answer is available and the company car rates are applied, I will hold fire, but I want to make sure I have done something by April 2011 so my P11D at the end of march 2012 shows below the cut off figure for Child benefit.

Can't find anything about childcare vouchers.

WASHER

qetu1357 wrote: »

Or agree with your employer to cut your hours so your income comes under the threshold.

May work for you qetu, but for many this is not an option, the better solution would be putting more into pension....think MSE! and you get to keep Child Benefit.