MSE News: Higher rate tax payers to lose child benefit

jlpike

As my tax position is so marginal another issue could be savings interest. I may make around £280 in interest (not an ISA) which I think I have to take into account in my calculations for taxable income????????????

I also should make around £300 per year interest from an ISA. I assume with this i do not need to take into account as taxable earnings?

I am unlikely to get a pay rise for a few years so that should not be an issue. What are the chances the government will raise the upper rate threshold by 2013? They used to raise it my around 3% every year.

Wow this is complicated

WASHER

http://www.direct.gov.uk/en/Nl1/Newsroom/PreBudgetReport2009/DG_183037

I have just read that the personal allowance is to go up 2011 - 2012 to £7475 per year, could help you.

As for the savings, how about transferring them into the low wage earners name, then the interest isn't going to affect you or your tax.


Losing Child Benefit has other issues as well for the stay at home mum, she may lose her home responsibilities protection (NI contributions) which would have an effect on her pension.

This is sooooo complicated. I hope Martin and his team can shred some light on the figures in the days to come. Its all very well dropping a brand at the supermarket to save a few pence, but this approx £140 4 weekly I stand to lose, I will have to do more than drop a brand.

jlpike

WASHER wrote: »

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.

Thanks Washer - I cant see HMRC reducing the tax bands to 42k. They may not increase them as they normally do though. I agree though I will have to be carefull that the C02 bandings do not go up and increase my p11d value.

Another thing that interests me is how they will calculate this. I cant see them calculating in arears as they do for child tax credit. there is no way they are going to give me £1800 in child benefit then take it off me when they fugure out I have just gone into 40% at the end of the tax year. I assume is will be based on the upper rate tax band in the previous tax year? As this is coming in in 2013 then it will be based on taxable earnings 2012-2013????

Any thoughts?

jlpike

Also in the same article

Higher rate of Income Tax to be frozen in 2012-13

The government has announced that the point at which individuals start to pay the higher rate of Income Tax (known as the higher rate threshold) will be frozen in 2012-13 at 2011-12 levels.


The increase to £7475 will give me another £1000 to play with.

I agree this is soooooooooo complicated

I guess i dont have to worry about it until the 2012-2013 tax year then pay a lump sum into my pension in march 2012 to make sure im 20%. I should know my p11d and any income such as interest on savings.

Another thing to do is make sure all taxable savings are in Ms JLPikes name.

smk77

sinstar wrote: »

I think it is RIDICULOUS that a household with 1 person paying higher rate tax will lose their child benefit while a household with the same income split between 2 people won't. They should introduce a household income threshold, that would be much more fair.

How is it fair that a single person earning £60k pays MORE tax, and loses their Child Benefit, while a couple each earning £30k not only pay LESS tax but also keep their Child Benefit?

I honestly thought this must be a joke when I heard it.

Or, a couple with 1 earning £44k and the other a house wife/husband get nothing whilst a couple earning £43k (£86k in total) get child benefit...

3under3

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

QUOTE]

This has really shocked me. I just fall into the 40% tax bracket and have high fares travelling to London, so with 3 children I would lose my CB. I could take a local job paying 20k less and with the extra benefits I would receive be no worse off! How can that make sense? How many people are now thinking the same thing?

shop-to-drop

I think they fixed it that high rate tax payers will not benefit from the forthcoming increase in personal tax free allowance. I think they will actually be worse off paying more tax at this time.

3under3

I assumed the calculation is taking into consideration that CB will be lost at this income in a few years.

WASHER

3under3 wrote: »

I assumed the calculation is taking into consideration that CB will be lost at this income in a few years.

I realised that and deleted the post. I'm shocked too by the figures quoted in that post.

jlpike

shop-to-drop wrote: »

I think they fixed it that high rate tax payers will not benefit from the forthcoming increase in personal tax free allowance. I think they will actually be worse off paying more tax at this time.

From HMRC

Higher rate taxpayers
There will be some adjustments to ensure that the majority of higher rate taxpayers will pay the same total level of Income Tax and National Insurance as previously planned. The basic rate limit for tax will be reduced by £2,500, and the upper earnings and profits limits for National Insurance by £1,650, based on current estimates of the Retail Prices Index (RPI). Exact figures for the basic rate limit and higher rate threshold will be confirmed in the autumn.

Yes you are right they are going to reduce the upper rate £37.4 k but dont exactly know what to yet?

This makes things worse for me as I will get an extra £1000 tax free but will pay upper rate on £1600 so am £600 down in my attempt to get under %40

even more confused now