Child benifit loss for higher tax rate earners

streethack

Has any one got any idea how this will work? it is from Jan 2012 but what tax year are they taking it from? April 2011 - April 2012? What is classed as a higher rate tax payer?

melly1980

It will work like this.

Put more people into 40% by reducing the threshold

Shaft them by taking CB off them at a boundary rather than tapering it fairly

This then appeases the lower down the scale earners / unemployed / disabled who themselves have been shafted.

Everyone then blames everyone else for why theyve been shafted while the real culprits ride off into the sunset having seen their careers out fine and dandy.

streethack

Yeah it makes sence but anyone know what the threshold will be or what it is now can't seem to find much info about it.

cr1mson

Ok maybe being thick here but I would say that a Higher rate tax payer is someone who pays higher rate tax!

And as far as I know it is 2013 anyway.

When they announced it they said higher rate taxpayers would still get child benefit to allow people to get HRP but then it would be clawed back through the tax system guessing would amend your tax code but don't know for sure.

C

streethack

Yes a higher tax payer is some who pays the 40% tax but I want to know the exact amount. Is it when you earn over £40,000 is it £42,000 43,000 ect. What is the minium some one would earn before the CB is removed in 2013?

Wee_Willy_Harris

Google is your friend too......

http://www.channel4.com/news/q-and-a-on-child-benefit-changes

melly1980

streethack wrote: »

Yes a higher tax payer is some who pays the 40% tax but I want to know the exact amount. Is it when you earn over £40,000 is it £42,000 43,000 ect. What is the minium some one would earn before the CB is removed in 2013?

its something in the region of 42800 currently. This figure (I think) will go up year on year with inflation so when it come in for 2013 it may be a higher figure. You also have to knock off what you have put into a pension from your salary so if you earn 42800 but contribute 5% to a pension for the purposes of this you are ~2K away from the higher rate. This of course is all assuming that they dont change the pension rules and dont @rse around with the 40% boundary again.

zagfles

It supposedly starts in Jan 2013. Why Jan which doesn't tie up with the tax year I don't know.

HRT threshold is currently 42475, it'll probably go up a bit in the March budget.

As mentioned there seem to be loads of ways of avoiding it if you're on the borderline, eg pension contributions, gift aid. One I've heard is to transfer child benefit to the grandparents!

Personally I think there'll be a u-turn just like Gordon Brown u-turned on a very similar policy 10 years ago.

melly1980

zagfles wrote: »

It supposedly starts in Jan 2013. Why Jan which doesn't tie up with the tax year I don't know.

HRT threshold is currently 42475, it'll probably go up a bit in the March budget.

As mentioned there seem to be loads of ways of avoiding it if you're on the borderline, eg pension contributions, gift aid. One I've heard is to transfer child benefit to the grandparents!

Personally I think there'll be a u-turn just like Gordon Brown u-turned on a very similar policy 10 years ago.

You'd think that they will close such loop holes though. Surely if they are revamping the entire welfare system its not beyond them to look at closing obvious ways around it?

SkyeKnight

melly1980 wrote: »

You'd think that they will close such loop holes though. Surely if they are revamping the entire welfare system its not beyond them to look at closing obvious ways around it?

I think there maybe just too many loopholes to try and close, but it could end up costing more than it saves if suddenly everyone earning between £42k and around £50k starts putting loads of extra money into their pensions and not paying 40% tax on it!

If pension payments are included in income then what will happen about employer's pension payments - will they count too? Otherwise everyone is going to start asking their bosses for cuts in salary and increases in pension payments. Plus everyone on over about £37k in a final-salary pension will suddenly find themselves losing Child Benefit!

Apparently George Osborne is implementing the cut in Child Benefit this way because it is "simpler". Hmmmmm.

zagfles

The problem is that if you try to means test something at a relatively high level of income, the cost the means test is more than the savings made by excluding the minority who'd no longer be eligible. Means testing is only cost effective when you exclude the majority.

That's why they're going for the "simple", and hence unfair, method of simply using the HRT threshold.

As for the loophole of using pension contributions - they never closed it for tax credits. Someone earning £50k with savings can contribute £45k to a pension and get max WTC & CTC, and live off that plus savings! Which is a much bigger loophole than child benefit.