MSE News: Child benefit cut to hit 1 million next Monday

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  • Icequeen99Icequeen99 Forumite
    3.8K Posts
    movilogo wrote: »
    Martin advised that even if you earn over £60k, it is still worth claiming CB because

    1. You can earn interest on that amount even if you have to return it later.
    2. You never know if you lose your job or your income falls. In that case you keep all or part of CB anyway.

    A lot of what MSE have advised on these two CB articles is incaccuate.

    The 2nd point about not knowing about losing your job is irrelevant as there is a two year revocation period anyway.

    IQ
  • emmalitaemmalita Forumite
    125 Posts
    Part of the Furniture Combo Breaker
    Is income based on 2011/2012 or the end of this tax year?
  • zagfleszagfles Forumite
    17.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper Chutzpah Haggler
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    Icequeen99 wrote: »
    The main part of the case was about a separate compliance issue, and was successfully argued.

    I don't think they would be counting the same income twice.
    As I understand it they would have to, to use the notional income rule for normal (non sacrifice) contributions, because of the way income is totalled in the Tax Credits (Definition and Calculation of Income) Regulations 2002.

    Say someone earned £60,000 (employment income), and contributed £50,000 to a pension.

    To use the notional income rule, they would have to count £50,000 of notional income in 3(1) Step 1, and £60,000 of employment income in 3(1) Step 2, add these together in Step 3 to come to £110,000.

    Then deduct the £50,000 pension contribution later on as per 3(7)(c), giving the original £60,000.

    So in step 3, the same income has been added twice. Would this stand up in law?
    They would essentially be saying that you have given up X pounds of your income to increase your entitlement to tax credits and so under the notional income rules they treat you as having that income (so going down in the calc as notional income). They would then still have to deduct the pension contribution amount in full. But I don't see how that counts the income twice. Have I missed something? It works in the same way as any notional income would.
    Yes, but normally notional income would be instead of a different income. For instance if instead of a pension contribution, they decided to sacrifice salary, then employment income is reduced by £50,000, and is replaced by notional income, so you don't count the same income twice in Step 3.
    What you did with the income you gave up becomes somewhat irrelevant to the calculation - whatever amount was given up would go down as notional income (presuming of course HMRC could show you had deprived yourself to gain extra tax credits)

    Agreed as well that it probably isn't worth their effort this close to UC.

    IQ
    I would have thought they'd have clamped down on this long ago if they were going to - the potential for abuse was much greater 5 years ago in the days of the £25,000 disregard for income rises and no disregard for falls. As I'm sure you're aware it was possible to get pension conts almost free, by contributing up to £25k every other year. Some accountants were advising clients to do this.
  • OK, for those of you who think we deserve to get it taken away, have a look at our figures: we live in the south-east in a borough of London with our 2 kids, 7 and 5. Husband takes home £2700 per month, he works very hard for this, long hours. As we live in a crazily expensive part of the country through no fault of our own we pay £1500 a month on our mortgage. (Have no illusions here, we are not in a mansion, we are in a semi-detached house with two main bedrooms and a box room which my daughter of 5 sleeps in. She is still in a toddler bed as that is all that will fit in her room). Council tax is £160 a month, bills bring it up to the £2k of outgoings...oh and then there is food too, well that's not cheap anymore! We don't have any 'luxuries' as some of you suggest, we do not go on holidays abroad like many do as we have no spare money at the end of the month, ever. So, it now seems that we will be even worse off as yet more is deducted from us. We would be better off claiming benefits I am sure, or at least having a lay-in every day and waiting for the money to arrive in our account!
  • I'm confused about completing the self assessment form. Does everyone who earn over £50k need to fill one in now and which tax year is it based on?

    My P60 for 2011-12 was £52k and my P60 for 2012-13 is projected to be well under £50k. Do I need to do anything? Thanks
  • edited 5 January 2013 at 6:22PM
    MissMoneypennyMissMoneypenny Forumite
    5.3K Posts
    edited 5 January 2013 at 6:22PM
    It would be better if we removed child benefit completely and let one of the parents' get an extra £30 net a week in their pay packet; as long as they work 35+ hours a week. £30, regardless of how many children they have. We should not keep punishing those who work hard at school to get a good job. Those people will pass that quality onto their children.

    Then reduce child tax credits/universal credits, to a maximum of 2 children.

    That way, people can work out how many children they can afford and plan ahead for all eventualities.
    RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
    Read the sticky on the House Buying, Renting & Selling board.


  • zagfleszagfles Forumite
    17.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper Chutzpah Haggler
    ✭✭✭✭✭
    I'm confused about completing the self assessment form. Does everyone who earn over £50k need to fill one in now and which tax year is it based on?

    My P60 for 2011-12 was £52k and my P60 for 2012-13 is projected to be well under £50k. Do I need to do anything? Thanks
    If you earn under £50k this year then you should be OK, but they might ask you to do a tax return. If you go over £50k you will have to do a tax return whether they ask or not. (unless you give up child ben)
  • Icequeen99Icequeen99 Forumite
    3.8K Posts
    zagfles wrote: »
    As I understand it they would have to, to use the notional income rule for normal (non sacrifice) contributions, because of the way income is totalled in the Tax Credits (Definition and Calculation of Income) Regulations 2002.

    Say someone earned £60,000 (employment income), and contributed £50,000 to a pension.

    To use the notional income rule, they would have to count £50,000 of notional income in 3(1) Step 1, and £60,000 of employment income in 3(1) Step 2, add these together in Step 3 to come to £110,000.

    Then deduct the £50,000 pension contribution later on as per 3(7)(c), giving the original £60,000.

    So in step 3, the same income has been added twice. Would this stand up in law?

    Yes, but normally notional income would be instead of a different income. For instance if instead of a pension contribution, they decided to sacrifice salary, then employment income is reduced by £50,000, and is replaced by notional income, so you don't count the same income twice in Step 3.

    I would have thought they'd have clamped down on this long ago if they were going to - the potential for abuse was much greater 5 years ago in the days of the £25,000 disregard for income rises and no disregard for falls. As I'm sure you're aware it was possible to get pension conts almost free, by contributing up to £25k every other year. Some accountants were advising clients to do this.

    Yes, i see what youre saying. Good point, be interesting to test.

    IQ
  • MB1919MB1919 Forumite
    38 Posts
    zagfles wrote: »
    If you earn under £50k this year then you should be OK, but they might ask you to do a tax return. If you go over £50k you will have to do a tax return whether they ask or not. (unless you give up child ben)
    I received the letter but do not have a nett adjusted income over £50,000. It is close but definitely under the threshold. I have never been over the threshold so am quite perplexed why I received it. The letter pretty much indicates that the recipient must register for SA. I phoned the helpline yesterday and asked the helpful woman whether I should complete a tax return. She put me on hold for an eternity because she had not been asked that question before and did not know the answer. She then informed me not to bother registering for SA. When I asked whether HMRC would chase me for unpaid tax given that they sent me the HICB letter, she just told me to wave my P60 in their face. I better not lose it then!
  • his_wifehis_wife Forumite
    350 Posts
    i have lost my cb too, people think 50,000 is a lot of money, on paper it is,,,,, take off fourty percent tax of over 40,000 , tax and ni,,, it doesnt quite come close to fifty thousand.

    I always thought it was a lot of money, until i met someone who earned it, now, by the time my husband pays csa for his daughter, it takes us even further down the scale.

    Its my second husband, so now, because i was fortunate to meet a high earner, we actually receive less.

    Now, his ex partner, receives, her wage, cb, csa, and all her tax credits etc, which takes her to a higher earner than us,,, no , im not bitter, well maybe a bit.

    However, i think all this needed a better re think, was 40 per cent tax not enough for the government, they will just have us knocking on doors, giving jobless people money for fun next.

    We have four children to support in this household, so, we dont have holidays, not had one for years, drive a battered car, have basic tv, and dont possess an i phone.

    The picture isnt always as it seems, when you look a bit deeper at peoples incomes.
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