MSE News: Higher rate tax payers to lose child benefit

jlpike

mesgna wrote: »

In April 2011 the 40% tax threshold is going to be lowered so anyone earning more than £42375 (not £44000!)will lose their child benefit. This is because although they will be raising the personal allowance from £6475 to £7475, the government didn't want the higher rate tax payers to benefit. So, double whammy, not only will higher rate tax payers lose the CB but more of their pay will be taxed at 40%. The government seem to have kept that one nice and quiet!

By the way, I am a stay at home mum with 3 children whose hubby is just a fraction over the current higher rate limit and, yes, I am now going to have to to find a job to make ends meet. We live in a modest house, have 1 old car, don't smoke, don't go out, drink very little and haven't had a holiday for 2 years. The government should look at total household income and not penalise stay-at-home mums.

This will not affect the banding though. You get to the £43875 by adding the tax free allowance of £6475 to the upper rate which is £37400.

So they will increase the tax free amount to £7475 but decrease the upper rate to £36400 so top rate tax payers do not benefit to the effect will be zero. 20% tax payers will be around £200 better off per year.

I think this is the case anyway??????

Also if your husband earns less than around £49k it is worth putting the difference into a pension or childcare vouchers because you will be £2500 down in CB with 3 kids (£5000 down in salary after tax and ni).

Assuming your husband earns 49k

If you work out your finances right you still be OK. If you are thinking about getting another job I would get childcare vouchers (up to 3k) add 2k extra pension contributions thus getting your husband under 40% and keeping £2500 child benefit.

You can then get a job as you have 3k of childcare to use for say 2 days per week and nearly all your salary for these 2 days will be mostly tax free as you will be using your tax allowance.

These are rough numbers but you would be much better off.

qetu1357

ajaxgeezer wrote: »

.... sure, remove some words, take it out of context, but the point is still the same. What is the logic that just because someone knocks a kid out then they should receive an automatic tax free bonus? The benefits system is there for the needy.

Kids are a lifestyle choice - you want it, you pay for it. When you pay for the luxury of my golf club membership, I'll be happy about paying for the luxury of people's sprogs.

This is what the poster said

"A child is just like any other luxury... a Springer Spaniel, a gold tooth, or a cocaine habit."

I quoted

"A child is just like any other luxury..a cocaine habit"

How is my quote out of context?

And a child is also not like a golf club membership either....

Mad..............

jlpike

julie2710 wrote: »

I'm not coy either about what I earn, I'm on £43K but have a company car as well - nothing flash a Zafira to carry my boys around in - diesel with an eco flex engine to save on fuel. The P11d value will push me over the limit. I live in West Sussex near Chichester so housing costs are high. I also have 2 very young boys so my childcare costs are just under £80 PER DAY!!! My mortage is about £1K per month, because of my marriage breakup I have been left with an additional £40K on my mortgage which went in to setting up my at the time husband's business - I have no hope of regaining that money. If I sold and downsized I would be no better off in cash terms as my mortgage is currently on an interest rate of 0.87% - lifetime tracker! So a move would mean a new mortgage and a much higher interest rate. To rent even a 2 bed property in this area I would be looking at £700 pcm at least! I don't really go out, we don't spend extravagantly, don't have sky or pay for broadband or any of the other stuff that people take for granted. I really really wish that things were cheaper for me but with childcare and a roof it means that the WFTC and CB I currently get is what keeps my head above water!

I know you're not trying to pick a fight but I just find that sometimes people look at one figure, see two kids and assume you made a life choice. Like I said, I'm an intelligent woman which is why I'm managing to keep my head above water, hold down a demanding full time job and raise 2 boys, but tbh despite my best efforts and everything I have paid into this country since I left school the government seem determined to ensure that people like me sink!

Hi you are almost exactly the same as me in terms as benefits. If I where you I would try and get your employer to offer your childcare vouchers as a salary sacrifice. you will save 30-40% on your childcare and keep your CB and effectively be 3-4k better off. Happy days.

pjread

So to absolutely confirm.... we all think if we use AVC's to decrease our effective salaries below the threshold...?

I don't think that £1b is looking too good once you look at the lost income tax George.

for what it's worth, this is about the first thing I've disagreed with, but it's a doozey. I'd either abolish it completely (sure, maybe roll something in to the tax credits malarky) or leave it alone. As it is I'll be funnelling an extra few k into my pension as I'd be down otherwise. And between £4k annual travel costs, £1k monthly rent (can't afford to buy anywhere big enough which i can get to work from - already travel 4hrs a day as it is) and just under £2k council tax... well there's 18k POST-TAX done, so about 25-30k in salary terms and that's before I feed the wife and kids. this is another 4-5k drop effectively.

I'd blatently be better off doing 16hrs a week as a cashier rather than flogging myself half to death trying to do the right thing...

Indie_Kid

jlpike wrote: »

Hi you are almost exactly the same as me in terms as benefits. If I where you I would try and get your employer to offer your childcare vouchers as a salary sacrifice. you will save 30-40% on your childcare and keep your CB and effectively be 3-4k better off. Happy days.

Not aimed at you or anyone on this thread - but that is one loophole they need to close. It's wrong that someone would be able to get child benefit because they put an extra couple of grand into a pension fund.

mesgna

jlpike wrote: »

This will not affect the banding though. You get to the £43875 by adding the tax free allowance of £6475 to the upper rate which is £37400.

So they will increase the tax free amount to £7475 but decrease the upper rate to £36400 so top rate tax payers do not benefit to the effect will be zero. 20% tax payers will be around £200 better off per year.

I think this is the case anyway??????

I understand that the new upper rate will be £34900. Add the new personal allowance of £7475 to this and that gives £42375. So anyone going over £42375 will lose Child Benefit and also pay more tax because more of their pay will fall into the 40% tax bracket. The government have been a bit crafty.

Thank you for the other advice regarding pensions and childcare vouchers.

smk77

Jayceee wrote: »

One would hope that before this happens it will be revised to be based upon the overall household income rather than an individual.

Secondly, and a few have said it before, having children is a lifestyle choice, if you can't afford them then don't have them. I don't have children and I don't want a single penny of my taxes supporting somebody that does, but unfortunately I don't have that choice.

I have a similar attitude. I spend a lot of my money raising my son. If he becomes a Doctor or Care Worker I don't want him to care for you in your old age. Why should he support you in your old age when you don't want to support him now?

The point is, the state needs people to have children. Some people have then and some people don't. But we all need them...

imanuelae

I understand the economy is in dire straights and we need to make sacrifices - good bye tax credits and child fund, hello reduced child care vouchers and increase in VAT, not happy, but OK.
BUT this is just ludicrous- it's so blatantantly NOT 'fair' and every single article in the media has has pointed this out , yet Cameron and Osbourne just can't see it. These guys need to touch base with reality! Either one can swap lives with me for a month (Clegg and Cable can finally come out of hiding) and let's see how well they cope in my world with my income, my job/hours and with my two kids!
The words "POLL TAX" ring a bell guys?

Please google and sign my petition CHILD BENEFIT CUTS: Stop chancellor from unfairly targeting one-parent & single-income families. if you are as outraged as I am, it's at the ipetitions.com website (sorry couldn't post link)

isy1011

Well I say anyone who voted Tory and is peed off about losing their child benefit deserves to be Im afraid!

Dont ever vote Tory unless you have a spare house in the country and child benefit money is classed as loose change!

isy1011

...and to add...those of you who keep harking on about children are a lifestyle choice are living in cloud cuckoo land. Who is going to be out there working and possibly wiping your bums when you are too old (and miserable) to work ...the children that we have created that's who!

You should thank us for making that sacrifice.