Child benefit U turn being lined up

zagfles

Generali wrote: »

I spent 6 months married under that regime but I was on PAYE so when I told the company that I worked for I got married they sorted it out.

AIUI, there was no cross over between the married allowance and working family tax credits.

The last govt replaced the married couples and additional personal allowance with a "children's tax credit" tax allowance. There was a year's gap - the MCA/APA were abolished in 2000 and the "children's tax credit" tax allowance was introduced in 2001, but it was stated policy that the children's tax credit is a replacement for the MCA/APA (even though married couples with no children lost out, and higher rate tax payers).

This came in for exactly the same criticism that the current govt plans for child ben - 2 earners below the HRT threshold get it in full but one earner above the HRT would lose some/all.

Then in 2003 the current payable "tax credits" replaced both the children's tax credit tax allowance (this became the "family element" of child tax credit) and the means tested WFTC (which became the rest of the current tax credits).

The "family element" was treated differently to the rest of tax credits, the "WFTC" parts were for those on lower incomes and started being withdrawn at an income of around £5000, the family element was retained till joint income went over £50,000

chewmylegoff

sunshinetours wrote: »

HMRC and related departments already have shown on countless occassions that they cannot administer correctly the overly complicated tax system we have had for the past generation.

A simple universal benefit is easily administerable and hard to mess up so I can't see how any changes will make any of this easier or cheaper to admninister

abolishing it completely and rolling it into the universal credit would make it cheaper to administer and result in it being means tested based on household income.

may be that would be the most sensible way to go, given that it would only push back the intended cuts by one year, and it would eliminate the current 'unfairness' argument (although no doubt the middle classes will continue to argue the untenable position that they should receive benefits on the basis that they pay tax).

zagfles

sunshinetours wrote: »

HMRC and related departments already have shown on countless occassions that they cannot administer correctly the overly complicated tax system we have had for the past generation.

A simple universal benefit is easily administerable and hard to mess up so I can't see how any changes will make any of this easier or cheaper to admninister

Yes, means tested benefits cost around 25% of the amount payable to administer, whereas universal benefits cost about 4%. So means testing is only worthwhile if you exclude the majority - it's pointless means testing when you'll only exclude the top 20% or so - it won't save anything!

That's why the only real way to save money by excluding the top 20% or so is to have a very simple means test, which inevitably will be unfair. But even this supposedly simple means test isn't simple - you have all sorts of problems when couples split up/get together, definition of household, what tax year is applicable, income changes etc.