MSE News: Higher rate tax payers to lose child benefit

shazziere

my husbands income will ensure that we will lose our child benefit.His job involves major responsibilty,getting called out at any time of the night to serve the public and works so many hours etc over what he should do.I feel his pay reflects that responsibility so dont see why we should be penalised .If he worked in a low risk job and earned over £44 grand then I would perhaps feel its appropriate to loose our benefit.

JimmyTheWig

The other thing I was going to say is that I think they should keep stuff like this as universal benefits but make them taxable.
So in effect those with higher incomes would receive less in benefits. But at least everyone would get something.

Kimitatsu

We will lose our child benefit in 2013 because my husband earns over the limit but as another poster has pointed out here - I would find it difficult to get a full time job as he works away a lot of the time.

It makes me smile that this is the same party who wanted to introduce a tax break for couples staying together, and to allow parents to stay at home. Apaprently though this only applies if you dont earn enough to be a higher rate tax payer.

Personally it rankles a little as I have two teenagers in a rural area, it costs a fortune to get them anywhere, but thats what their child benefit is for. So now, my stepchildren who live in a city and whose mother claims WTC, CTC, CB and gets a large amount of money in maintenance (which is not included for means testing purposes) and holds down a full time job, netting over £2500 a month into her household will not lose this benefit but we will.

This needs far more of an overhaul than just sticking plasters on a festering wound. Either make the benefits system completely transparent and make one massive overhaul linking all of the benefits together, one form one system or leave universal benefits alone.

It makes me all the more cross coming on the release of a story on the bbc news website that banks are once again borrowing more than they can pay back and there is a very real concern that the government will once again have to prop up the financial world - after they have all paid themselves huge bonuses that is. To be honest once is a mistake but twice would be unforgivable.

sly_dog_jonah

The recipient of CB currently gets NI contributions when kids are under 16, called Home Responsibilities Protection (HRP) to count towards basic state pension entitlement. They also get Earnings Factor credits for kids under 6 for Second State Pension (SSP) entitlements. This protects the pension entitlements of anyone taking a career break to raise kids. Unless something is put in place to replace this, it will make sense for higher earning families to still claim the CB and then pay it back through tax returns.

Salary sacrifice schemes for charity, pension or child care vouchers could take people out of the higher tax bands and therefore make them eligible to receive (and not have to subsequently pay back) CB.

picardygirl

I've been listening to and reading debates about this topic this morning, and i think what most opinions are, is that, ok so no body wants to lose child benefit, and the government have to set a limit somewhere, so why not at the high tax rate earnings limit, but it should be on "household" income not one persons earnings!

fluffymovie

I do think that this is a good idea in principle but recognise that the system is unfair in a number of ways and hope that the Govt will be looking to sort out a number of things.

At present, as the previous poster has said, Maintenance is disregarded (in my HB/CTB job) and so is child benefit.

What this means is that you have some parents who receive very substantial payments from former partners for their children and who also get CHB and they will get the same benefit as those who do not get any maintenance and soon, no CHB. This seems very unfair to me.

WestonDave

JimmyTheWig wrote: »

Does anyone know whether this would work or not?
Also, does anyone know if they are planning on tapering the payments, either above or below the 40% threshold? Would be crazy if they didn't.

Obviously the detail is still to be sorted however the way it has been said to work is that everyone will still get CB, but those who pay higher rate tax will have it clawed back in extra tax when they submit their tax return.

The effect of making pension contributions or charitable donations is to create an allowable deduction from income such that you don't go into higher rate tax - so from what we understand at this stage, someone who is earning very slightly over the threshold would benefit from making a suitable amount of pension/charitable contributions to reduce their income sufficient to avoid their CB being clawed back.

WestonDave

The other announcement which came alongside this at the conference was that a family's total benefit take, would be capped so that they could not total more than an average working family gets by going out to work.

beaker141

I'm annoyed. I too will lose it, we have 4 kids and a stay at home wife who doesnt work. This enables me to focus clearly on my job. I'm already penalised as others have said by not being able to use my wifes tax free personal allowance and now this blow on top.

I'm tempted to drop half a days work, a little bit of salary sacrfice somewhere and I'll get back below the band.

I hope the government listens to this or its going to be nasty for them come the next election.

jsg2

I don't have a problem with means testing child benefit - indeed we will be losing child benefit - and with mine and my partners salaries combined (about £75,000) that seems reasonable.

The problem is that the government has gone for a half cooked, totally unfair, system. One where a couple can earn over £80,000 between them and still get child benefit!

Yet a single mum on £45,000 - who is already probably spending a good chunk of that on childcare costs, is going to lose the child benefit - and probably struggle and have to give up work!

Either child benefit needs to be universal or properly means tested (couldn't it be linked together with child tax credits which already is means tested?) - this unfair half way house announcemnet needs rethinking urgently.

I would also like to see it tapered off - say between £50,000 and £70,000 of household income.