MSE News: Higher rate tax payers to lose child benefit

andys15

I was having a discussion last night with my wife about government rewarding failure. In my wifes job she is able to give performance related pay rises each April. Likewise her boss will give her a performance related pay rise. Now assuming someone is getting close to the 44K mark, what incentive is now there for that person to perform well(apart from keeping their job), lets say they will still perform well, but will no longer go above and beyond.
Its like the student loan, I know a lady who does not want a job that pays above the threshold where she has to start repaying the loan. Or the welfare system that actually means some people are worse off to actually work, and I cannot blame a single parent bringing up 3 kids to start work and actually be worse off. We need radical change as its a ridiculous situation to be in and it is rewarding failure.

hebe

WASHER wrote: »

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

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.

I emailed my MP yesterday asking if she can clarify this aspect of the change. I'm wondering if those affected would have to continue to claim child benefit in order to secure the NI contributions, and then repay the CB through tax, which seems very cumbersome but probably worth it in terms of securing NI contributions until work is possible again.

Andy_Davies

PipsoG wrote: »

Isn't it time that Child Benefit should be Means Tested? It does seem very unfair if those on high income get paid when they don't really have such a need as those on a low income.

Following the announcement where single earners of £44,000 won't get Child Benefit but with both parents who earn below the High Tax Rate [which gives them a total income of £70,000 plus] will get it!

How can that be fair - with the debt that is owed by the country this seems stupid!

The harsh reality is that it should probably be rolled into the Child Tax Credit, just like winter fuel allowance should be rolled into the Pension Credit system.

(Oh and free TV Licenses should be scrapped)

Andy

goldengirl28

this is farsical

i work fulltime and hubby stays at home looking after 3 kids........i earn 46k so will stop getting child benefit

my sister works so does her husband.... they earn 59k combined, they also have 5 kids so they keep getting benefit for them.......how is that fair?

Naughty_Noonoo

I may be incorrect but if you earn just over the threshold in a particular tax year and you make contributions to a personal pension during the same tax year then the amount paid in to the pension is deducted from your taxable earnings. Example Earn £44,500 and pay £1,000 into a pension then your taxable income would be £43,500. This would enable you to continue receiving Child Benefit.

Please let me know if I am correct?

Thank you.

Kitten-B

I don't really agree with it, esp the fact its not based on household income. Depending on bonus/overtime my husband could be caught by it. We are expecting our first child next month and had budgeted based on receiving child benefit and things are already so tight. Having a child costs nearly £1k a month in childcare and essentials (and before any savings for the future) - and I think it's fair to get some sort of help. I would however rather it was more like the US and in the form of say an increased personal allowance and not a benefit.

Anyway I'm off topic - came on here to ask a question.

Does anyone know how it will be determined whether someone is a higher rate taxpayer or not? (I don't mean the threshold - which is £42,875 from April 2011).

Ie: for the childcare vouchers changes coming in, in April 2011 - earnings are estimated at the start of the year excluding potential potential bonus and overtime. I wonder will it be the same? And is there a clawback for bonus/overtime or are they excluded?

And will earnings be post salary sacrifice earnings? (ie: If my husband sarcifices his salary for pension and childcare vouchers he will be below higher rate).

I doubt there's anything concrete out there but any thoughts?

jlpike

Kitten-B wrote: »

I don't really agree with it, esp the fact its not based on household income. Depending on bonus/overtime my husband could be caught by it. We are expecting our first child next month and had budgeted based on receiving child benefit and things are already so tight. Having a child costs nearly £1k a month in childcare and essentials (and before any savings for the future) - and I think it's fair to get some sort of help. I would however rather it was more like the US and in the form of say an increased personal allowance and not a benefit.

Anyway I'm off topic - came on here to ask a question.

Does anyone know how it will be determined whether someone is a higher rate taxpayer or not? (I don't mean the threshold - which is £42,875 from April 2011).

Ie: for the childcare vouchers changes coming in, in April 2011 - earnings are estimated at the start of the year excluding potential potential bonus and overtime. I wonder will it be the same? And is there a clawback for bonus/overtime or are they excluded?

And will earnings be post salary sacrifice earnings? (ie: If my husband sarcifices his salary for pension and childcare vouchers he will be below higher rate).

I doubt there's anything concrete out there but any thoughts?

I thought it was taxable earnings i.e £43k - pension - salary sacrifice (i.e childcare vouchers) - charity donations.

There will be a huge void where nobody earns 44k to 50k. This is a really dumb decision:T

goldengirl28

Ha ha........dastardly plan hatched

i'll go part time in 3 years time and let hubby get a part time job as well

i'll lose 3k and hubby can earn at least 20k in his trade

Kitten-B

jlpike wrote: »

I thought it was taxable earnings i.e £43k - pension - salary sacrifice (i.e childcare vouchers) - charity donations.

There will be a huge void where nobody earns 44k to 50k. This is a really dumb decision:T

But pension and childcare vouchers are not taxable earnings?

jlpike

Kitten-B wrote: »

But pension and childcare vouchers are not taxable earnings?

Yes but I think they will have the effect of reducing your taxable earnings. If you earn 45K but put 3k pa in a pension then your taxable earnings are 42k and you keep your CB.

You can do this with a private pension company pension (employer contributions) childcare vouchers or charity donations.

Also Taxable earnings include company car, private petrol, private health etc so you need to add the P11D value onto what you earn to get your taxable income then take off pensions etc.

I think this is the case anyway?