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Tax Rate changes and Child Benefit
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Posts: 3 Newbie
I saw on BBC News today that "The threshold at which the higher rate of tax kicks in is to be reduced to £35,001, from £37,400".
Late last year the news was saying about Child Benefit being dropped for higher-rate tax payers, the article indicates that the higher rate is where one parent earns £44,000.
Do these 2 articles mean that parents earning over 35k won't get Child Benefit or have I confused 2 different taxes?
Thanks in advance,
Ian
PS: I tried putting in links to the news stories, but the site won't let me as I'm a new user.
Late last year the news was saying about Child Benefit being dropped for higher-rate tax payers, the article indicates that the higher rate is where one parent earns £44,000.
Do these 2 articles mean that parents earning over 35k won't get Child Benefit or have I confused 2 different taxes?
Thanks in advance,
Ian
PS: I tried putting in links to the news stories, but the site won't let me as I'm a new user.
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Comments
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I have exactly the same question. I didnt even realise I was moving into a higher tax rate, and thought our child benefit was safe because of earning less than £44000. Is this changing to £35-ish?0
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I would like to know this too.
Last year, it was reported that the rate would kick in around £42k, today they are reporting the rate will kick in at £35k.
I've read bbc news and sky news and it's not clear as it refers to the personal allowance as being separate:
"The threshold for the higher-rate 40% income tax rate will be £35,001 from April, compared with £37,401 this financial year. The IFS calculates that 750,000 more people will become higher-rate taxpayers.
Taking into account the personal allowance, an individual will start to see their income tax and National Insurance payments increase sharply when their earnings rise above £42,475".
So if I earn £35,001+, will I get child benefit or not???0 -
Glad it's not just me that's confused0
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I think it's a case of if you earn £35001 on top of your personal allowance then you'll fall into the higher rate tax bracket. Your personal allowance does not count for income tax purposes.
2011/12
Personal allowance is £7475 for people earning upto £100,000
So if you earn £7475 + £35001 you will fall into the higher rate tax bracket and not receive Child Benefit under the new rules (not sure if they're in place yet)
Information on tax bands can be found on the HMRC website
http://www.hmrc.gov.uk/rates/it.htm0 -
I think it's a case of if you earn £35001 on top of your personal allowance then you'll fall into the higher rate tax bracket. Your personal allowance does not count for income tax purposes.
2011/12
Personal allowance is £7475 for people earning upto £100,000
So if you earn £7475 + £35001 you will fall into the higher rate tax bracket and not receive Child Benefit under the new rules (not sure if they're in place yet)
Information on tax bands can be found on the HMRC website
http://www.hmrc.gov.uk/rates/it.htm
Yes its the £35K PLUS your £7k personal allowance which dictates what tax band you're in. So after April if you earn over £42,476 you will be a higher rate tax payer and higher rate tax payers don't get Child Benefit. The original £44k figure was based on the current numbers.0 -
The article I'd not been able to link to has now been updated and is a little clearer. It now says;The threshold for the higher-rate 40% income tax rate will be £35,001 of taxable income from April, compared with £37,401 this financial year
Still can't post links I'm afraid, but it's currently the 2nd highest news story on the BBC News site.0 -
PHEW!!!!!!!!!!!
Thanks!0 -
This child benefit thing is so unfair. i can't believe there hasn't been more protest about it. I know £42k is a decent wage but it's not a fortune - a mortgage, a few kids and a car will soon eat that up. Yet you can together earn £80+k and still get it. Now that is a very decent wage and you wouldn't need child benefit. Like all these millionaires getting heating allowance automatically. What is going on?
Can't wait til this coalition collapses.0 -
I'm not sure this will ever happen. It's a hair-brained plan, the last lot considered something similar (taxing child benefit) but backed down when it was pointed out that tax is independant so you can't tax a person on someone else's income (even their spouse's).
The plan here seems to be similar - tax the higher rate taxpayer if they or their spouse claims child benefit (rather than actually stop child benefit for the claimant).
I await the technical details of how they're going to implement this. But I have a feeling they'll back down. It is clearly unfair, maybe they'll just lower the 40% tax threshold a bit for everyone so people without kids can "be in it together".
Depending how it's implemented (if it is) there may be simple ways to avoid it for people on the borderline such as making additional pension contributions.0 -
danielanthony wrote: »Yes its the £35K PLUS your £7k personal allowance which dictates what tax band you're in. So after April if you earn over £42,476 you will be a higher rate tax payer and higher rate tax payers don't get Child Benefit. The original £44k figure was based on the current numbers.
This change isn't planned to come in till 2013 (if it ever does as per my other post)0
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