Child Benefit Changes in 2012

zagfles

tooldle wrote: »

I think it is more simple. If you have a look on the BBC website at their tax calculator, it shows that a family with one parent working earning a salary of approx 43K, gets almost as much back from the system as they pay into it. Those with two workers earning approx 60K are making a massive net contribution (approx 10 time more than the 43K family), purely because they receive so little back from the system. The figures do change a bit according to the number of kids you have. It doesn't provide an explanation of how they calculate the figure for 'take from the system'. Quite interesting, I must admit I never thought that the difference would be so large.

The calculator is rubbish. It is extremely crude - it just puts you into a "decile".

If you put in a couple earning 30,000 each, and then try a couple with one earning 60,000 and the other nothing, you get the exact same answer despite the latter couple paying far more tax (about £4500 more) since they only get one personal allowance and will be well into 40%.

Yet both answers are -£5457, despite a difference of £4500 in tax!

zagfles

tooldle wrote: »

I've just run the figures that chickpea suggested above. I have given the family one child aged 11 in education.
The family earning 50K and 20K make a net tax contribution (after child benefit, education, health etc) of £12433.
The family with two salaries of 42K each, make a net tax contribution of £27221.
This I think is why they are taking away child benefit from one group and not the other.

It gave the exact same answer of -12433 in both cases when I tried those figures. Which is clearly wrong anyway.

chickpea

tooldle wrote: »

I've just run the figures that chickpea suggested above. I have given the family one child aged 11 in education.
The family earning 50K and 20K make a net tax contribution (after child benefit, education, health etc) of £12433.
The family with two salaries of 42K each, make a net tax contribution of £27221.
This I think is why they are taking away child benefit from one group and not the other.

That....doesn't look right! To put it politely. The 50k earner alone surely is going to be paying at least £17k in taxes (roughly 30% of 43k plus 40% of 7k!) add to this the tax the 20k earner will be paying - about 4k? so where does the disparity come from?

zagfles

chickpea wrote: »

That....doesn't look right! To put it politely. The 50k earner alone surely is going to be paying at least £17k in taxes (roughly 30% of 43k plus 40% of 7k!) add to this the tax the 20k earner will be paying - about 4k? so where does the disparity come from?

Because all it does is shoves you in a "decile" and shows the average balance for that decile. It's next to useless.

It them goes on to give exact figures for tax & NI, but these aren't used to calculate the balance, as proved by the 2x 30k family vs the 1x60k.

It also claims that a family (2 kids) with single earner on £45000 would get "cash benefits of £5,783"!! Erm, no they wouldn't, they'd get £1750 child ben and that would be it.

tooldle

I think you are misunderstanding. It is not about just income tax and NI, it is about all tax paid, including VAT and the other taxes we all pay i.e. that on booze, cigs, fuel etc. In terms of what it gives you back, again it is not just benefits, but the cost of educating children, healthcare for each individual in the family. These things are not free, they are funded from the revenue the governent collects from us in tax. Here is Wales, the education allowance per head if 5.5K. I have no idea what the healthcare figure is per head.
Granted this is fairly broad brush, it would be complicated to give a precise figure for each family as the number of variables are quite large. I think what it does illustrate quite well though, is that we often underestimate what we are getting back, versus what we put in. I was quite shocked that it is only households in the 7th decile and above that are making a net contribution.

zagfles

tooldle wrote: »

I think you are misunderstanding. It is not about just income tax and NI, it is about all tax paid, including VAT and the other taxes we all pay i.e. that on booze, cigs, fuel etc. In terms of what it gives you back, again it is not just benefits, but the cost of educating children, healthcare for each individual in the family. These things are not free, they are funded from the revenue the governent collects from us in tax. Here is Wales, the education allowance per head if 5.5K. I have no idea what the healthcare figure is per head.
Granted this is fairly broad brush, it would be complicated to give a precise figure for each family as the number of variables are quite large. I think what it does illustrate quite well though, is that we often underestimate what we are getting back, versus what we put in. I was quite shocked that it is only households in the 7th decile and above that are making a net contribution.

Which is why it's complete rubbish. It doesn't ask whether you smoke/drink, it doesn't ask whether you have private education/health insurance, it places everyone into a broad "decile", it averages stuff out so much as to be totally meaningless.

It also ignore the fact that the state subsidises children through education etc because in a generations' time those "children" will, on average, be subsidising the state through their taxes. So it gives a misleading impression of larger families being subsidised more. Just as a household containing 6 pensioners would appear to be massively subsidised.

xylophone

Flower76 wrote: »

Hi

This is the first time I've posted although I've visited the forums many times for the extremely useful information that people post.

My husband and I have 4 young children aged 6 and under. My husband had a pay rise last year which I think will mean that we will lose child benefit from next year.

I've found very vague information about the threshold for child benefit but does anyone have any other figures about the new cut off point? I've seen mentions of £37,000 and others that say £42,000.

After our 2nd child I worked evenings and Saturdays but then my husband's job changed which means he is away during the week sometimes so returning to my job was not possible.

We use this money every week as part of our budget and do not have any money left at the end of the month to save and we by no means live a "lavish" lifestyle. We shop at asda/aldi, I always shop around when renewing insurance/house insurance etc. and look for the cheapest deals on gas/elec. I transfer the credit cards debt to 0% cards to avoid paying interest. The children have a lot of "hand-me-down" clothes and my husband and I rarely buy new clothes for ourselves.

We try and cut back wherever possible but I just don't see how we will manage when we lose child benefit next year. We have no family nearby to help with the children so childcare costs would just be ridiculous if I were to go back to work at the moment. Once they are all in school it will be easier but that's a few years off at the minute.

I'm sure there will be people reading this thinking that we shouldn't have had 4 children if we can't afford to pay for them. At the moment we can afford it but if we lose this child benefit it will make things exteremely difficult.

So, does anyone know the real threshold for cut off for this benefit? Are there any e-petitions on the go to have the government re-evaluate their decision as I think it is unfair for a family with one income of £37,000 to lose the benefit yet a joint income family of £70,00 still receive the benefit. Or does anyone have any genuine work from home ideas for me please???

Many thanks!

Rose

http://money.uk.msn.com/your-financial-life/family-money/how-to-beat-child-benefit-cuts
might be of interest.

tooldle

Unfortunately it is not possible to take into account what children will contribute at a later date. There is no guarantee of the future. The whole point is that the government needs to raise extra revenue now. What may or may not be collected in the future is irrelevent.
Personally I think that they would love to raise the rate of NI above the upper threshold. Such a move would also only target higher rate tax payers. Would it go down well with the electorate? Probably not. People tend to think of NI being for the NHS rather than a general tax. The proposed solution targets higher rate tax payer, but only those with kids. I don't agree with the policy, but can see that families with kids in education are receiving the most return from the government, hence the proposed reduction in child benefit to bring down the net take.
There is no mention of other groups losing the benefit at the moment, but I would guess means testing, or perhaps some kind of cap will follow.

zagfles

tooldle wrote: »

Unfortunately it is not possible to take into account what children will contribute at a later date. There is no guarantee of the future.

Of course they can - in general terms at least. We know we'll need workers like plumbers, electricians, doctors etc in 30 years time, and that most of those workers & hence taxpayers will be the children of today and those yet to be born.

The whole point is that the government needs to raise extra revenue now. What may or may not be collected in the future is irrelevent.

Oh really? The govt is still borrowing. We still have a budget deficit. Do you really think the govt would get such low interest rates on its borrowing if it looks like running low on its income source, ie taxpayers? The children of today will be paying off the current govt debt.

Personally I think that they would love to raise the rate of NI above the upper threshold. Such a move would also only target higher rate tax payers.

Why not be honest about it and raise the tax rate? NI is no longer an insurance, certainly not above the upper threshold.