MSE News: Budget 2012: what the child benefit overhaul means for you

Derek67

If you earn over 50K this year and lose some FA, what happens the 2nd year if you earn under 50K, do you get your full allowance back?

Gilgamesh

So I'm a little confused as to what to do in my circumstances. I earn just over 60k and have been separated from my partner, who works part time and earns well below 50k, for about 6 months.

Our separation is pretty amicable and my partner currently lives with our son in the family home, whilst I am staying with a friend nearby in return for a nominal contribution towards rent and bills. At present neither of us have the funds to sell the house and each live somewhere separate. Although the arrangement is not ideal - I am desperate to have my own space with my things around me again - we are stuck with it for now. At least I have somewhere very nearby to stay which means I can see plenty of my son.

All of my affairs, bank account, tax etc continue to be registered at the family home for now, even though I am not sleeping there at all and I continue to contribute towards bills, council tax etc.

What on earth does all this mean for child benefit? My partner and I are definitely remaining separated but cannot afford to go it alone at the moment, hence our current situation is something of a half way house. I cannot find any clear help or guideance from HMRC on this - it would appear that we technically constitute a household despite not being married and me sleeping elsewhere.

Any advice on what to do would be appreciated. The current best bet seems to be to carry on claiming and stick the cash in a savings account and pay the lot back via a tax return. I still feel that my partner should be entitled to claim in full as she earns way below the threshold and we are separated.

kevin137

If you are separated and the child lives with your ex then it would be a single household income and your ex would be eligible. But you do need to move where you are registered for many reasons, even something as simple as your car insurance is invalid if they find out..!

Although you do need to remember that child support is payable at the moment at 15% for 1 child 20% for 2 and 25% for 3 of more, of your NET income, so when choosing a mortgage in the future, do allow for this, so it can be budgeted for as you will get no leeway from the CSA because you have a big mortgage etc...

RedSky

Being registered at the same address HRMC will see you as a couple where one partner earns over the threshold. You can always elect not to receive child benefit then make a request to cancel the election if your circumstances change. If you don't already fill out a self-assessment return then making the election not to receive child benefit will mean you won't have to start filling one out.

sly_dog_jonah

HMRC are being somewhat cheeky with their letters, failing to qualify income as 'net adjusted income'. Many parents contribute to a pension or sacrifice salary for childcare vouchers, which will reduce their income for the purposes of calculating the Child Benefit charge (quite possibly below the £50k threshold). Even the calculator on gov.uk website omits the Childcare Voucher element. The HMRC checker is likewise a blunt instrument which fails to mention net adjusted income.

Not only has the Child Benefit clawback been unfairly designed, but now it's being poorly communicated to parents. It looks to me like a cynical ploy by HMRC to excessively reduce the number of claimants, the Self Assessment workload and the number of stay-at-home parents who get NI contributions by registering for child benefit.

AgentOso_2

I still can't actually believe that this change is ploughing ahead.

Even the most ardent "squeezed middle" bashers must see that the loopholes / lack of clear guidance / potential legal challenges and of course the utter unfairness of one couple earning more than another couple but getting full benefit while the other suffer in dismay is utter foly.

The tories keep saying this is a popular policy, did they ask:

Do you want to take more money from the middle?

or did they say,

Is it fair that a couple earning 49K each get full benefit while another couple where one earner earns 60K but the other partner earns nothing (for whatever reason)?

I think I know which way the question was slanted. Will never see my X in a conservative box again.

Had this been applied per household income then I could not grumble and would have accepted it but the unfairness does not sit well with me.

stevwarn

I completed my SA tax return for 2011/12 and my total gross income was £50,032. Therefore, I was expecting to receive a letter from HMRC stating I would need to pay a tax charge on the CB my partners receives for our 2 children. However, the https://www.gov.uk/child-benefit-tax-calculator states I do not need to pay any CB tax charge :think:.

I guess the reason for anomaly is because you only pay 1% tax per £100 over £50k, can anyone confirm this to be correct?

If this is correct, then it should be advertised as anyone earning over £50,100 will pay a proportion of tax?

labyrinth84

As someone who works full time for little over 16k a year, is the loss of child benefit REALLY that big a deal for those earning 50k+?

The £20 a week CB I receive for my daughter has unfortunately had to be paid into an account that clears my overdraft for the past 2 years...and though times are tough, it's not had a massive effect not receiving it! Though, once I do start receiving it, it will be nice to have that extra £20 a week...because I'm on a low income!

I've never earned £50k +, but if I did I can't imagine the loss of CB having a knock on effect...

wayne0

agree with you on that labyrinth...

did you know that a bank cannot legally prevent you from accessing benefits... even if your overdrawn etc... any money sent to you by way of a benefit is to be accessible...

im guessing that you choose to use the 20/week to pay off the dept though? (which i wonder... have you frozen the account - or are you still paying interest etc?)

labyrinth84

wayne0 wrote: »

agree with you on that labyrinth...

did you know that a bank cannot legally prevent you from accessing benefits... even if your overdrawn etc... any money sent to you by way of a benefit is to be accessible...

im guessing that you choose to use the 20/week to pay off the dept though? (which i wonder... have you frozen the account - or are you still paying interest etc?)

I wasn't actually aware of that no. But you may have just helped me with my case of reclaiming excessive bank charges!! (apparently, cases can still go through if the charges caused extreme financial hardship) and I'm sure if I added that the bank told me they wouldn't freeze the interest/charges until I had the CB paid in regularly, it would help my case greatly!

I basically had the overdraft when I owned a property with my ex partner. Mortgage was only £140 a month at the time, so we had plenty of spare cash and I used the overdraft instead of a credit card if needed. When we split and my rent cost £500 a month, I was defaulting left, right and centre! As I managed to get the overdraft within its limit (but not cleared) they introduced the £5 a day charge instead of the £35 a month/time of default which immediately sent my charges through the roof! I thought best I just got it cleared...I suppose another debt cleared very soon!