MSE News: Budget 2012: Child benefit cut partially reversed

zagfles

shedboy94 wrote: »

I would like to be in the position to moan about losing CB or to discuss how much I would earn after £50kpa, however I am not. I don't grudge anyone who works hard and earns good money but at the end of the day most people in the country are suffering one way or another ( I for example are deemed to be getting paid too much so the government has frozen my pay for 4 years, and increased my pension contributions, effectively handing me a real time pay cut ) , but I think it a little unfair that those earning a good salary are complaining about losing a benefit that probably should have been means tested in the 1st place. Again I'll ask the question, if £60k is too low a figure for these benefits to stop then what figure should it be?

What salary should free state education, free NHS etc stop at?

Higher earners pay taxes to pay for these things. Rather than regressive cuts in benefits, how about increasing tax rates? But all govts are the same, they don't dare (except as an outgoing bear-trap for the next govt - ie the 50p rate).

JimmyTheWig

JimmyTheWig wrote: »

My confusion with this term is that, to me, Net Income means income after income tax and NI.
But I don't think that this is what it means here, is it?

Is this, pretty much for most people, the same as Taxable Income?

sly_dog_jonah wrote: »

No it isn't, read the HMRC link in my last post for more info, as they've explained 'adjusted net income' previously - it is just lacking an example with child benefit.

Sorry, Jonah, are you saying "No it isn't income after tax"? Or are you saying "No it isn't, pretty much for most people, the same as Taxable Income"?

Have read your link and while I normally understand this sort of jargon I can't make sense of it.

zagfles

AirlieBird wrote: »

The income tax system is based on individuals and does not know who your partner is. The Child Benefit system only knows who is claiming Child Benefit and does not know who your partner is. So how exactly do they think they are going to identify a Child Benefit recipient's partner who earns above £50k?

The child benefit claim asks about partners. It needs to so that eg if 2 single parents move in together as partners, they don't both get the higher "first child" rate.

Anyway HMRC can tie addresses from PAYE/SA with child benefit quite easily, I'd imagine.

zagfles

jenfa wrote: »

As a result of my husband's pay we will lose the child benefit even though I don't work. What I am interested in is the credit that I thought I received by claiming child benefit against my National Insurance premiums that I can't pay because I am bringing up a child. I am sure when we originally applied for CB this was included does anyone know what will happen to those?

If I asked my husband's bank or employer how much he earned they would say that is confidential but the child benefit is in my name so I'm not sure how this is going to be administered because he does not have to tell me how much he earns.

He doesn't need to tell you. You can just carry on claiming.

But he'll need to declare the ch ben you receive, and he'll be taxed on it if his income is over £50k.

becominganobsessivesaver

I can see why people are getting annoyed about a couple earning £100k still getting the benefit, but how many of these families do you think there are? A £50k job is not going to be a standard 9-5 and most families in this position will have to make a sacrifice such as expensive childcare or either partner reducing hours in order to manage the additional demands of a family (and therefore no longer earning 100k).

I earn just over the higher rate threshold and would have lost my child benefit with the original proposals (oh was made redundant and is now self employed on a low income). Someone on a £44k doesnt actually take home much more than some of the SOAs you see for lower earners with benefit top ups. Add on to that that many higher rate tax payers will also have student loan repayments etc. If you earn £60k thats about an extra £1k per month which is a big enough differential to not feel bitter.

Thats my rant anyway!!!!

zagfles

JimmyTheWig wrote: »

Sorry, Jonah, are you saying "No it isn't income after tax"? Or are you saying "No it isn't, pretty much for most people, the same as Taxable Income"?

Have read your link and while I normally understand this sort of jargon I can't make sense of it.

It's less complicated than it sounds. Basically it's gross (taxable) income less deductions like (gross) pension contributions and gift aid.

It's worded in the way it is because when HMRC calculate tax, for stuff which has had basic rate tax relief at source like gift aid and personal pensions, they don't take this off your income before calculating tax, they increase the basic rate band to give any higher rate relief.

sly_dog_jonah

JimmyTheWig wrote: »

Sorry, Jonah, are you saying "No it isn't income after tax"? Or are you saying "No it isn't, pretty much for most people, the same as Taxable Income"?

Have read your link and while I normally understand this sort of jargon I can't make sense of it.

No probs. I think it's the 'net' thats confusing.

'Adjusted net income' = Gross income - Grossed-up pension contributions (where tax relief at source) - Grossed-up charitable donations + relief on trade union/police org membership.

Whereas 'Net income' is what you're left over with after tax.

Therefore adjusted net income is actually a value of your effective gross income.

It's further confused if you have salary sacrifice for childcare vouchers or pensions, as this reduces the gross income as far as HMRC are concerned.

sly_dog_jonah

zagfles wrote: »

Anyone claiming tax credits has a marginal rate of at least 73%

How do you arrive at that figure?

zagfles

sly_dog_jonah wrote: »

How do you arrive at that figure?

20% tax, 12% NI and 41% tax credits taper.

For those not earning enough to pay tax, they'll usually be entitled to other benefits like housing benefit/council tax benefit and have a MDR of about 96% !!

sly_dog_jonah

shedboy94 wrote: »

I would like to be in the position to moan about losing CB or to discuss how much I would earn after £50kpa, however I am not. I don't grudge anyone who works hard and earns good money but at the end of the day most people in the country are suffering one way or another ( I for example are deemed to be getting paid too much so the government has frozen my pay for 4 years, and increased my pension contributions, effectively handing me a real time pay cut ) , but I think it a little unfair that those earning a good salary are complaining about losing a benefit that probably should have been means tested in the 1st place. Again I'll ask the question, if £60k is too low a figure for these benefits to stop then what figure should it be?

The fact is CB hasn't been means tested in the past, so removing it should be done fairly.

IMHO it would be fairer if the tapering started at £45k and didn't stop until £65k, so that the marginal rate of tax was lower as your earnings increase through this range. Therefore you'd only lose 1% of the CB for every £200 of increase of salary (instead of £100). That would still be around a 8.8% marginal rate on top of Tax and NI for a 2 child family, but it's better than 17.5%.

It would be more fairer though if it was based on household income, not the highest earner.