MSE News: Are you a child benefit loser? Full Q&A

JimmyTheWig

Juststayingafloat wrote: »

Is it total income or taxable income?

There's a reasonably complicated way of working it out, but it looks to me like it will be taxable income for the vast majority of people.

rumncoke

Had a look at this thread as unsure about our situation. Last tax year due to ill health DH income was below 50K. Now though fortunately back on full pay. Will just have to wait & see if we get a letter, otherwise I will be contacting them to stop our payments.

What I have found interesting though is the moans about losing CB. I do agree with the unfairness of dual income families earning 100K still being able to claim. However having been on this site for a while I know that there are very many people who would love to be earning 50K plus.

From the BBC website 1 of the comments was regarding the fact that losing CB is equivalent to the loss of a family holiday. Sorry but CB was never ever meant to be for luxuries but the very basics.

I appreciate that childcare costs can be high and also mortgage/rent depending where you live. But I believe the problem has arisen due to our ever increasing expectations for our children and ourselves in general. ie after school costly activities, meals out, weekends away etc. How many of us in our 50's remember days out being the local park and a picnic, not fancy theme parks etc. and birthday parties in the house. (compared to the ridiculously expensive themed parties children now expect)

OK rant over.

hanlou007

Would of been easier to cap child benefit for all at one child.......might stop some people getting jiggy
Crazy that you can have a household income of £100k and keep it and another household of £60k and lose it.

People will say £60k is a good wage for anyone, but then why should these lose it but those that pay NO tax and have no ambition keep it

Pisces

Oh the implementation of this policy is madness!

If I understand it for two people who earn over £50k and are married, as long as they salary sacrifice something (pension, childcare vouchers, charity donations) to bring them under the £50k threshold they avoid the whole admin nightmare and keep the full benefit... right?

So this is taxable income and not reference salary. Madness !

JimmyTheWig

Pisces wrote: »

Oh the implementation of this policy is madness!

If I understand it for two people who earn over £50k and are married, as long as they salary sacrifice something (pension, childcare vouchers, charity donations) to bring them under the £50k threshold they avoid the whole admin nightmare and keep the full benefit... right?

So this is taxable income and not reference salary. Madness !

Correct.
What annoys me the most about it is that the people who will really be hit will be those families with single earners with high living costs (e.g. big mortgages). It will be precisely these people who _won't_ be able to afford to put more money into their pension.
So if you don't need the money you get to keep it. If you need it, you lose it.

Pisces

JimmyTheWig wrote: »

Correct.
What annoys me the most about it is that the people who will really be hit will be those families with single earners with high living costs (e.g. big mortgages). It will be precisely these people who _won't_ be able to afford to put more money into their pension.
So if you don't need the money you get to keep it. If you need it, you lose it.

Thanks for confirming. And I completely agree, it can only be a politician who dreamed this up, not someone who actually lives in the real world! This will sting all the people who it's trying to help - single people/families working hard to manage on one wage.

MD123_2

I have just spent 30 minutes on the phone to HMRC to try to clarify some details pertaining to the calculations and what constitutes "adjusted net income" - they were somewhat confused (even more than me) by what I asked them.

My main concern is that the calculations are based on "adjusted net income" (check pdf called budget2012/tiin-0620 on HMRC website - this document gives details from 2012 budget on how the calculations will be decided) but I have been told by HMRC that personal allowance (currently £8105 annually) does not come into the calculation??

ANI "is the total of the individual’s income subject to income tax less specified deductions." It is my understanding that the personal allowance is tax free, therefore, should not be part of the calculation for child benefit tax purposes - they define ANI as any part of income subject to tax in numerous documents readily available on the HMRC website (easily found by simple web engine search) .

I also asked about childcare vouchers that are essentially a salary sacrifice and are tax free - these were not being taken into account, either!!

The calculator on the HMRC takes none of this into account, basing the calculations on gross salary less certain tax free deductions (pensions, etc).

I do not understand how tax can be levied based on income if HMRC are not applying their own rules to the adjusted net income for child benefit tax calculations - can anyone help?

JimmyTheWig

MD123 wrote: »

I have been told by HMRC that personal allowance (currently £8105 annually) does not come into the calculation??

I would agree with this, I'm afraid.

I also asked about childcare vouchers that are essentially a salary sacrifice and are tax free - these were not being taken into account, either!!

But I'd be surprised if this was the case.

princessdon

rumncoke wrote: »

From the BBC website 1 of the comments was regarding the fact that losing CB is equivalent to the loss of a family holiday. Sorry but CB was never ever meant to be for luxuries but the very basics.


OK rant over.

So anyone on benefits should not afford a holiday as ALL benefits were for the basics?

zagfles

JimmyTheWig wrote: »

I would agree with this, I'm afraid.


But I'd be surprised if this was the case.

Agreed. It's total income, not just income above the personal allowance. And it's taxable income, so any salary sacrifice for non-taxable benefits will reduce your income for the purposes of this.