MSE News: Higher rate tax payers to lose child benefit

andys15

jkmum wrote: »

I think some people here are not realising there is a big difference between someone who earns 'around' the 40% bracket and someone who earns twice as much. Those of us at the lower end still have to pay for prescriptions, council tax and car tax. There's no way we could afford Bupa and fat lot of good it would do in the first few hours after an RTA anyway.

As for complaining about the high cost of the mortgage, just because you are a high earner, does not mean you need the house to match.

Why the hell should I not have a home to match. I am not a hign earner for nothing. I have made sacrifices along the way to become a high earner.

Duncombe

andys15 wrote: »

Why the hell should I not have a home to match. I am not a hign earner for nothing. I have made sacrifices along the way to become a high earner.

Because you can't afford it?

keithnic_2

The major problem I have with this decision is the unfairness. Earn £1 more than the higher tax allowance and you lose effectively £4,000 before tax if you have three children. If you're earning in the early £40s where is the incentive to work hard and get a pay rise, because you will effectively lose out. The more kids you have the worse it gets. Have five kids and its effectively a £7,000 pay cut and probably more as I haven't taken into account National Insurance.

I fall just in the higher rate zone and my wife doesn't work as we decided she should spend as much time looking after and playing with kids. Why can't they phase this in gradually?

If you earn £1 more in income, then you pay a %age of that in tax. To have selected a salary level where just a big hit comes in is simply unfair. There will be a dead zone of salaries where no-one with children wants to earn a few thousand above £44k.

I sincerely hope the Government think this through in more detail and make some changes. I live in hope...

andys15

Duncombe wrote: »

Because you can't afford it?

Well I can as I am sat in it now.

misfire

Mortgage isn't a choice - when we got married I was a student and hubby was earning a low wage but we couldn't get housed as we had no kids and hubby was earning. We couldn't get a housing association house as they take of the council list. We worked damn hard to get our house - sacrificing a huge amount on the way and it was only possible due to my parents lending us money which we paid back monthly for 7 years. I would love not to have the worry of a huge mortgage (due to stupid house price - not a luxury house - our house needs alot of work which we can't afford to do) but we had not choice - apart from stay at the mercy of landlords - the house we lived in when first married the toilet only worked if you flushed it with a coat hanger - the cooker was condemened when they came to read the meter they went past it and the meter on the gas mans belt went off and he condemend it - The landlord would do nothing. So we sacrificed luxuries, holidays, consumer goods to be able to put a roof over our heads.


I think this is very unfair - especially when they don't take the family house hold income and divide by two. I could go into a huge rant here I think it is very very unfair.

Duncombe

andys15 wrote: »

Once I take into account my massive mortgage and debt payment I earn less than the average man. Anyone who has bought there first house in the last 5 years will have a massive mortgage, and some like me will have debt due to the large deposits you have to pay. Lets have tax relief for us who are mortgage poor

The 'average man' can't afford a high-earner mortgage. I would have thought that if you earn less than the average man you certainly can't afford one.

Sounds to me like you're just complaining because you can.

Grumgrum_2

keithnic wrote: »

The major problem I have with this decision is the unfairness. Earn £1 more than the higher tax allowance and you lose effectively £4,000 before tax if you have three children. If you're earning in the early £40s where is the incentive to work hard and get a pay rise, because you will effectively lose out. The more kids you have the worse it gets. Have five kids and its effectively a £7,000 pay cut and probably more as I haven't taken into account National Insurance.

I fall just in the higher rate zone and my wife doesn't work as we decided she should spend as much time looking after and playing with kids. Why can't they phase this in gradually?

If you earn £1 more in income, then you pay a %age of that in tax. To have selected a salary level where just a big hit comes in is simply unfair. There will be a dead zone of salaries where no-one with children wants to earn a few thousand above £44k.

I sincerely hope the Government think this through in more detail and make some changes. I live in hope...

I am in a similar situation of earning just above the 44k level, I wonder if it is possible to max out on salary sacrifice schemes (childcare vouchers or increased pension contributions such as AVC) in order to bring the earnings below the 44k threshold? Please can some of the brighter sparks on the board enlighten me? Thank you in advance !

keithnic_2

I'm thinking that increasing pension contributions would reduce the amount of PAYE and get below the £44k level. How much do you forego until its worth taking your full salary again though? Do you wait until you're on £50k plus? I have no idea what we're going to do.
Maybe put the wife out to work chance would be a fine thing.

gauly

keithnic wrote: »

I'm thinking that increasing pension contributions would reduce the amount of PAYE and get below the £44k level. How much do you forego until its worth taking your full salary again though? Do you wait until you're on £50k plus? I have no idea what we're going to do.
Maybe put the wife out to work chance would be a fine thing.

You will have to earn about 2.5x whatever your child benefit entitlement is in order to take home more pay (assuming taxes at about 40%). Probably worth putting it into a pension until considerably over that rather than receive a few extra pounds benefit.

I would guess a large percentage of top rate tax payers earn between £44k and £50k and will now be getting bigger pensions (and paying less tax). Is it just me who is thinking that this policy isn't going to save nearly as much money as the chancellor reckons?

System

Call me cynical but don't you think it's probable that the government have announced this version of limiting child benefit prior to "listening" to the people and coming up with a fairer, less harsh version which saves the country the same amount of money. That way they look as if they are caring.

Giving my tuppence worth I agree that the benefits system needs a complete overhaul and within that we need to make people think about whether they can afford to keep producing children. Rewarding people for giving birth to more than 2 or 3 children should stop. That includes paying for mansions to house them all.

Previous posters have rightly pointed out that we need children to grow up and become adults to fund our pensions etc in the future. However what we really need are children who become productive adults working and paying taxes and far too often these days we see families where the only career they aspire to is procreating and claiming benefits and they really are "like father like son and like mother like daughter". I'm not by any means saying that all benefit claimants fit that bill but we've seen enough examples in the papers and on the Jeremy Kyle show to see that it does happen.

Limiting child benefit and tax credits to 2 or 3 children might go a little way to discouraging this lifestyle choice.
This could be implemented very easily and take affect 9 months from now with those currently getting paid for more than 2 or 3 children being told no further child benefit or tax credits would be paid for additional children. That way anyone pregnant now (and not able to make a choice) would not be affected. Simple and easy to administer and if an income limit has to be included too it should be based on household not individual income.