MSE News: Higher rate tax payers to lose child benefit

pjread

isy1011 wrote: »

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!

Well, it's peed me off a bit, but your comment's an overreaction. It is IMO a mistake, politically if not economically. It's one (ok, I'll admit fairly major) peed-off moment for me so far in the parliament. However it was virtually a daily experience during the last one.

A much easier solution might be just to make child benefit taxable. The whole fairness point becomes a lot more apt then. You know, that tiered income tax thing?

Lets not forget that contribution from higher earners to the exchequer are already significant, and that believe it or not with 3 kids, a long (expensive) commute and living in the SE £50k or so really isn't a massive income. I have friends that pull maybe 20k and have much more disposable income than I do.

greent

sh1305 wrote: »

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.

But it's no more 'wrong' than a couple earning 40k each and keeping child benefit. No more 'wrong' than the fact that earning £1 over the limit means you lose all your child benefit. And what's wrong with investing in a pension, rather than expecting to be supported in later life?

JimmyTheWig

Dorastar wrote: »

Just a query and don't know if anyone here might have the answer. Since I work in education my pension is all deducted from my pay already - I am sure they will clobber me for more in the October review - I don't know if I can then pay into something else to reduce me below the £44000 threshold (I am £500 over it atm) or whether this loophole is only open to people who pay into private schemes. I have a nasty feeling there will be something that says 'sod off' in my case - but then I have this feeling every time Mr Cameron opens his mouth at the moment.

I certainly don't have an official answer, but I know that if your gross salary is £500 over the 40% threshold and you pay £1000 per year into a pension (any pension, not just private) then you won't pay any income tax in the 40% bracket. And so, by the sounds of it, you won't lose your child benefit.
But if you are £500 over the limit after your pension contributions then you will be taxed at 40% on some of your income and you will lose your child benefit. In which case you need to look for alternatives - e.g. childcare vouchers, charitable donations, etc.

jlpike

greent wrote: »

But it's no more 'wrong' than a couple earning 40k each and keeping child benefit. No more 'wrong' than the fact that earning £1 over the limit means you lose all your child benefit. And what's wrong with investing in a pension, rather than expecting to be supported in later life?

Spot on It is not a loophole it is the way the tax system works And only people earning 44k to 49k would bother doing this as if you are over 50k you would get more in salary than you would lose in CB although you will not be happy losing your CB.

Even on 20% you get tax relief on pensions and childcare but you only get 20% not 40%.

There would though be many better ways to do this.

You could tax CB therfore
If you are n the dole and pay no tax you get 100%
If you are a 20% tax payer you get 80%
if you are a 40% tax payer you get 60%
If you are a 50% tax payer you get 50%.

Or like others have said use the existing tax credit system where it can match the benefit exactly in a proportional way to household income.

esmerelda98

smk77 wrote: »

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...

This argument is spurious, since doctors and social workers don't choose to go into their professions as a charitable act. That poster will, along with other taxpayers, be paying the salary of your doctor or social worker child.

jlpike

JimmyTheWig wrote: »

I certainly don't have an official answer, but I know that if your gross salary is £500 over the 40% threshold and you pay £1000 per year into a pension (any pension, not just private) then you won't pay any income tax in the 40% bracket. And so, by the sounds of it, you won't lose your child benefit.
But if you are £500 over the limit after your pension contributions then you will be taxed at 40% on some of your income and you will lose your child benefit. In which case you need to look for alternatives - e.g. childcare vouchers, charitable donations, etc.

At least we have sometime to get our heads around this because it will get very complcated especially if you do not have a set salary, work overtime, get bonus's, company cars, private health or any other taxable benefit. Or have savings interest as I think even savings interest adds to your taxable income unless it is an ISA.

Hopefully there may be a few online calculators developed to help with this otherwise people will need to spend hours working this out on a spreadsheet or pay an accountant to do it.

I may set myself up as a financial advisor, I could make a fortune

I suspect many people will be making AVC's in March every year?

Andy_Davies

jlpike wrote: »

Lose £2000 a year - I won't be able to have truffle and foie gras on toast for breakfast anymore.;)

This augument is about the reduction in CB not about people jellous about what others earn. If someone goes to university then does professional qualifications to do a very stressfull skillfull job requiring to be away from home lots they should earn a good salary.

I hate it when people moan about others in this way. If you don't like your lot in life do something about it, getting all upset becuase the neighbour has a new car is not going to make it happen for you. Work hard and make the right choices and good things will happen. Everyone has a choice in life and we live in a capitalist society.

Everyone wants more in life and there is nothing wrong with that and there is nothing wrong with people feeling !!!! that they are £2000 worse off especially when it is being implemented in an unfair way.

Remember if you have 3 kids you lose £2500 tax free which is equivilent of £5000 salary. Even on £50k that is 10%.

Who wants a 10% pay cut.

I'd agree but I think there's a more fundamental problem going on, and one that doesn't spell well for society as a whole

On the one hand we have the people who through luck, education or hard work etc. have done well and now earn reasonable salaries, pay huge amounts of tax and are being asked to give up more.

On the other we have people who are unlucky, or in poorly paid jobs, cannot work, or in some cases even refuse to work and who want the state to bring their level of income to a point that they see as reasonable.

The only way the state can raise the incomes of the second group is by reducing their taxes or giving them more in benefit, but this all has to be funded by someone - the people who are "relatively well off", at some point there comes a breaking point and since 1997 the higher rate tax payers have been squeezed more and more.

(this bit may sound a bit Daily Mail ish but it's not intended in that way, and probably isn't applicable to people who read MSE)

To cap it off as part of the bargain for one part of society funding another's benefits, there are expectations that those receiving benefits play their part in society e.g. that they don't keep producing kids like they're rabbits, that they respect others, that they bring up their kids to respects others, that they try to seek work if they're fit enough etc., and there's a proportion of people in the UK who just don't seem willing to do this, and this is always going to annoy those who are funding their benefits.

Losing Child Benefit will present problems for some of those losing it, and saying "I have much less than you so you don't deserve it", or responding "I pay huge amounts of taxes, I deserve something back" really doesn't help.

What we really need to do is work out how to glue society back together, and cut the excess spending that exists under all governments so that we can start to cut taxes from the bottom up.

"Walk a mile in another man's shoes before you judge him" comes to mind.

Andy

smk77

esmerelda98 wrote: »

This argument is spurious, since doctors and social workers don't choose to go into their professions as a charitable act. That poster will, along with other taxpayers, be paying the salary of your doctor or social worker child.

It was an opinion - not an argument.

Just remember next time you need to see a doctor that someone else made the decision to have a child AND spent many years developing that child so that they could one day is in front of you - and perhaps save your life.

The "I don't want a single penny of my taxes supporting somebody that does" comment that I responded to was selfish and unappreciative.

esmerelda98

smk77 wrote: »

It was an opinion - not an argument.

Just remember next time you need to see a doctor that someone else made the decision to have a child AND spent many years developing that child so that they could one day is in front of you - and perhaps save your life.

The "I don't want a single penny of my taxes supporting somebody that does" comment that I responded to was selfish and unappreciative.

Firstly, as a person working in a 'caring' occupation, I have never thought that anyone should be grateful to my parents for having me and training me. My parents motivations and my own were purely selfish. Whatever the attractions of working in a profession where one can positively impact other people's lives, sometimes in a very profound way, doctors, nurses, social workers etc, enter those professions for their own benefit. There will always be people wanting to enter these professions, including perhaps my children. I see no reason to be thinking about how the doctor came to be in the position that they are in, or to be offering up a silent prayer to the person who brought them into existence. In short, I wish people would stop thinking that they are doing everyone else a favour by having their children.

In any case, these professionals are generously supported through school and receive greatly subsidised university tuition, at the taxpayers expense (a subsidy of roughly £75,000 in the case of doctors). The poster recognised that it is fairly unfeasible for the taxes of people like him/her to not be spent on child-support programmes. No doubt they recognise that we don't always get out what we put in, and vice-versa. However, there is a plethora of child-support programmes. Education is one thing. Ensuring the children of the disadvantaged and the !!!!less have a bearable existence is also justified. I feel no reason to financially support any and every child who is born because they might one day go into a 'worthy' profession, or for any other reason.

looby38

I am new to this forum, but have read with much interest the views of everybody. I would however like to point out my situation. I am a single mother of four young children ranging between 11 and 4 years. I had never expected tobcome a single parent but due to lots of circumstances I did. I had been a stay at home mother prior to this. However rather than wallow in self pity I picked myself up and returned to university so I could provide a better future for my children. I graduated last year and my children are very proud at what I achieved. I am now set to be start an proffessional MA to again lead me to a better career so I can support my children without state reliance. I will still get my CB but please take note, not all of us single mums who have 4 children are scroungers, I rely on tax credits and CB to survive and support my children. I believe CB should remain a universal benefit for families, children are and should be seen as an investment for the future workforce. Yes, we all have a choice to have children but the fact I have four does not make me a scrounger or lazy!!! Some of us actually want to achieve and make a better life for our children. The way forward is to increase income tax for the rich and by the rich I mean those who earnings are much higher than 44K. That way the attack is across the board and not directed at those with families who lets face it need this money more than others at a time of financial uncertainty.