This is a bit unfair!

ydraigcoch

Hi,

I was just thinking about tax and stuff!

Heres my situation, I am in full time work and earn £46k pa. My Wife who will shortly be giving birth to our first child, has stopped work and will remain off work to look after the child/children.

My gripe is that, due to my earnings I pay 40% tax over x amount. However if my wife was working and was earning say 35k and lets say I also earned 35k, my household income is then 70k, and yet non of us would pay 40% tax!

Not only that but because of my real earnings, my wife cannot claim dole money etc, because of the household income :mad: . This seems so unfair! We would actually be more financially better off if we split up and she declared herself as a single Mother!

What sort of country are we living in?

If I'm wrong about any of this I would be interested to know. Now Im off to calm down!

RayWolfe

That's one of the many benefits of separate taxation that the divine Maggie introduced.
Be thankful that you are earning enough to pay higher tax and if you want your wife to continue earning perhaps the baby idea was not a good one.
Can you tell us how you, with your earnings, have become worse off?

mitchaa

RayWolfe wrote: »

Can you tell us how you, with your earnings, have become worse off?

If his wife had an annual salary of the average UK £25000 then they are obviously going to lose this as she's giving up work to look after child.

This means they are £25000 or £1500-£1600 down per month.

She cant claim anything due to his salary. This is where his gripe is, and yes i find it very unfair too.

What they could do but highly illegal and is benefit fraud but the system is open to abuse.....

1) Split up
2) Mother claims IS as a single parent
3) Mother claims ISMI to pay her mortgage
4) Mother claims higher rate CTC
5) Mother claims council tax benefit, free school dinners, prescriptions, maternity grant, higher rate CTF voucher and so on and on

In no way, shape or form am i suggesting the O.P do the above

Doing things this way they would be a lot better off financially as the O.P joked about in his opening post.

ydraigcoch

mmm, I don't think going down the illegal route is a good idea! Knowing my luck I'd be the one to get caught! It amazes me that in this country we seem to encourage people to split up?

Raywolfe, "Be thankful that you are earning enough to pay higher tax " Why do you say this?

mitchaa your right about my gripe, it is so annoying!

Pennywise

Yes, this is a very common problem.

It is grossly unfair that husbands and wives can freely transfer investments between them to utilise two lots of capital gains tax annual exemptions and lower rate tax bands, and more recently, can effectively share two lots of inheritance tax nil-rate bands, but aren't allowed to share or transfer unused
allowances for income tax.

Many other enlightened countries have realised this problem and have legislated to allow for transfer of allowances between spouses. In the UK, in this week's budget, we are expected to see our Chancellor go in the complete opposite direction with his "income shifting" legislation, to stop income being transferred from one spouse to another.

There is something seriously wrong where you have a situation in which one spouse earns £50k and the other spouse earns nothing, pay far more in tax than if they both earned £25k. That is just plain illogical and I fail to see how anyone can justify the way it works.

The benefits system takes into account "household" earnings, but the tax system continues to be "per person" with no allowances enabling allowances or income to be "transferred" between spouses.

ydraigcoch

Exactly! Well put pennywise!