MSE News: Higher rate tax payers to lose child benefit

Dorastar

To be honest I'm not sure the article really helps - we are just over the £44k as I have a leadership post in a school that I have worked really hard to achieve and means I am working at least 50 hours most weeks. This was my choice and I do not begrudge my hours or situation, I have always been the main wage earner as my dh is in another caring profession which has low wages but brings him immense job satisfaction and means we can juggle childcare between him, me, the childminder and Nana to make things as easy as possible.

We do run two cars as our jobs are in opposite directions and our children's school is close to Nana's in case of emergency rather than half an hour away from my work (dh travels around a lot for his). This is really the only major expense we have - no smoking, hardly any drinking, no nights out, and the second of the two cars is more of a moving shed than a vehicle! We are not materially motivated at all - our current tv was bought from a charity shop to replace the one we had been previously given which had died, neither of which were plasmas. We cannot have holidays in term time due to my job and our last holiday was a self camp near York for a pricely £120 for the whole week. We took our food with us and used vouchers for any sites that cost money.

We budget for everything and are currently paying back credit as dh was unemployed for 2 years as the company he worked for collapsed and there was no redundancy money as they lost everything. He was entitled to jsa for 6 months and then nothing.

We live within our means and the only people getting new clothes are the children and only because they have a nasty growing habit. Our dd happily shops for bargains in charity shops and her Christmas list last year just asked for a new dressing gown and slippers.

We support a child in Thailand, although we have had to cut back on previous charitable giving which was a major dilema for me personally when dh lost his job.

We can manage without our CB but it is budgeted into our incomings and its loss will mean that we will have to budget even further, although our commitment to our sponsored child is something we have determined we will continue as we write to him and want to continue setting an example to our children.

The government has to make major changes and I am all in favour of CB being reviewed but believe the cut as it stands is unfair as there are plenty of families with much higher incomes who will still receive the benefit. As an education professional the government has also said it will be reviewing my pension and I am expecting that there will be a major increase in the contributions I have to make so there will be even more budgeting.

My parents rang the other night to chat and one of the topics of conversation was how well the government were doing in "stopping the rich claiming benefits they don't need" (both tory voters since they were born) Needless to say the conversation ended pretty quickly after that - I know this is a long post and apologise but there are many higher earner tax payers who have worked hard, do care about others and do care about how and where their money goes, I am going to be searching on MSE even more from now on.

At least I have a job, my health, my family and chocolate.

Wanted to add that although education was 'ringfenced' by the government we have already been advised we will lose 15% of our current budget and that schools have been advised to set deficit budgets to recoup the cost of redundancies over the next 5 years - we have never been allowed to set deficit budgets in the past but our local authority is set to lose 30 million pounds in one of the most deprived areas of the country. If anyone can remember the bad old times under Mrs Thatcher then be prepared for much much worse to come.

DirectDebacle

Dorastar wrote: »

.......We live within our means....

We can manage without our CB but it is budgeted into our incomings and its loss will mean that we will have to budget even further,.....

The government has to make major changes and I am all in favour of CB being reviewed but believe the cut as it stands is unfair as there are plenty of families with much higher incomes who will still receive the benefit......

Thank you for your thoughtful and well set out post which raised several important topics but not all are connected with CB.

You live within your means and and do not need CB. You also recognise that if you have to make further budgetary adjustments then there is still some fat there to cut.

You realise that the govt. are not just taking a swipe at HRTP but have a serious defecit to deal with. I am sure as the cuts unfold then HRTP will be expected to contribute more towards reducing the defecit.

I do not agree with your reasons for seeing the cuts to CB as unfair.

This particular measure was aimed at HRTP specifically and without exception. Therefore HRTP have all been treated equally within their tax band.

I accept there is an anomaly when you compare a few HRTP to some dual income standard rate taxpayers.

It is my belief that come Oct 20th, in one way or another this anomaly will become irrelevant. Standard rate taxpayers are going to contribute massively to defecit reduction and their time is not too far away now.

I see the announcement they made re CB as a warning shot across everybodies bows. I think it is more a political statement of intent than a pure cost cutting excercise. The cuts to come are going to be much more severe and immediate than this tinkering with CB, which you have been given 3 years to plan for.

The lower down the foodchain you get the more difficult it becomes to accomodate income reduction.

Warning bells sounded when I heard G.O. declare that no longer would a family on benefits receive more than the avge family income (disabilities excepted). To me this statement was incomplete and deliberately not finished with the addition of

" so the govt. will not only take measures to ensure this but will also ensure that no family on or above the national avge. income will be entitled to any benefits."

We aint seen nothing yet.

Dorastar

Sorry I did have a wee off topic wander there but isn't anywhere else I can spout these days!

"I accept there is an anomaly when you compare a few HRTP to some dual income standard rate taxpayers. "

Would rather the anomaly got fixed since they already have most of the information anyway - am sure HMRC can work out that two people either with the same surname and/or living at the same address and registered as married or a couple are probably a couple, and they do already know which tax bracket we fall into so wouldn't have thought it was so difficult or costly?

"We aint seen nothing yet."

And that surely is the biggest worry we all have to face. As long as they don't try to shut down MSE we might have a chance but the future looks as bleak as they made my childhood.

ossian

I earn a little more than the threshhold for 40% tax. I pay all my higher rate taxable income into a combination of a SIPP and a company pension. Will I still loose child benefit? Will the difference in tax treatment between company and personal pensions make a difference?

ukjoel

sh1305 wrote: »

It's wrong that someone would be able to get child benefit because they put an extra couple of grand into a pension fund.

Who said anything about a couple of grand. Bearing in mind you need to earn nearly 5k pre tax to cover the loss of CB if you have 3 kids I know several people who have reviewed their finances and said sod it - I will pay an extra 1k a month into the pension until the kids hit 18.

Bearing in mind the govt are so keen to ensure people invest in their pensions for the future this may be a really well though out plan on their behalf and not a quick fix idea. Maybe thats why its based on single earner rather than combined income.

meredydd78

My income is just above the HR tax threshold. I herd someone mention on the radio that if I increased my pension contribution that would take me under the threshold and we could therefore recieve child benefit. is this true?

richard9991

Child benefit or family allowance as it was then was first introduced after the 2nd world war to encourage the birth rate it was paid for second and subsecuent children now we are over populated so the original idea is no longer needed.

http://news.bbc.co.uk/1/hi/business/3185213.stm

sc1905

meredydd78 wrote: »

My income is just above the HR tax threshold. I herd someone mention on the radio that if I increased my pension contribution that would take me under the threshold and we could therefore recieve child benefit. is this true?

I heard exactly the same thing. Not sure where you could find out though. Would be interested to find out myself. Would it make any difference if you were in a Final Salary scheme and made contributions in another personal AVC money purchase pension. Would you still get the 40% relief as well.

olderman2

danielanthony wrote: »

The reports say that higher rate tax payers will loose this benefit but the cut off figure banded around is £44,000

£37400 is the figure after deducting Personal Allowance of £6475. £43875 less £6475 = £37400.

MissMoneypenny

DirectDebacle wrote: »

I am now reconsidering my previous posts after having read this article in yesterdays Guardian as to how severely these changes can impact a HRP just above the cut-off point.

http://www.guardian.co.uk/money/2010/oct/09/child-benefit-stay-home-mother

From that article

This cut has made a big difference to our lives. We had to relocate to expensive Cambridge for his work – which meant a £230,000 mortgage for a three-bedroom house – and we run two cars as we live in a village and he has to commute 140 miles a day to Ipswich.

Am I missing something here? If losing CB for their 2 children is going to mean that much to them, why don't they move to Ispwich where her husband works which will; save the cost of running two cars; cut their mortgage down as Ispwich is a cheaper area.

I notice she also has a cleaner for 2 hours a week costing £80pm, yet she is a stay at home mum!