Child benefit to be scrapped for higher taxpayers.

[Mad Cyril]

http://www.bbc.co.uk/news/uk-politics-11464300

Mr Osborne said he expected the public to accept that it was not fair to tax someone earning £18,000 a year to pay child benefit to someone earning £50,000.

This would make more sense to me if those whose earnings fall below the higher rate threshold received more child benefit which I assume they won't.

I would also like to see some sort of means testing on benefits for the elderly - they don't all need free bus passes, eye tests etc.

It would also seems unfair to me that people can be taxed on £18K yet billions of pounds worth of tax remains uncollected each year.

 

[EastStandBlue]

http://www.bbc.co.uk/news/uk-politics-11464300



This would make more sense to me if those whose earnings fall below the higher rate threshold received more child benefit which I assume they won't.

I would also like to see some sort of means testing on benefits for the elderly - they don't all need free bus passes, eye tests etc.

It would also seems unfair to me that people can be taxed on £18K yet billions of pounds worth of tax remains uncollected each year.

Definitely agreed in principle, although surely the upper class elderly make up at least 50% of the Tory demographic?

 

[McNasty]

Definitely agreed in principle, although surely the upper class elderly make up at least 50% of the Tory demographic?

If you mean the Queen votes Tory what about Prince Phillip ?

 

[EastStandBlue]

if you mean the queen votes tory what about prince phillip ?

bnp.........

 

[osymandus]

bnp.........

Youare aware his Greek ;)

 

[canveyshrimper]

Youare aware his Greek ;)

Or possibly German. :unsure:

 

[Holy Joe]

Not sure this is going to be implemented fairly. IMO it should be on household income. But the way I've heard it described is if one member of household is a 40 or 50% tax payer the benfit is scrapped. So 1 household with 1 earner on 44k would lose it but another household with 2 earners each on 40k would keep it.

 

[Bob Cratchitt]

Or possibly German. :unsure:

Where did the Saxons and the Angles originate from my I ask?

 

[Hotman]

Not sure this is going to be implemented fairly. IMO it should be on household income. But the way I've heard it described is if one member of household is a 40 or 50% tax payer the benfit is scrapped. So 1 household with 1 earner on 44k would lose it but another household with 2 earners each on 40k would keep it.

The easy way for them to have solved that would be for it to be on the claimants earnings, so that families with one high earner can elect the claimant to receive.

Whatever way you look at it though, as much as it is nice to receive a few quid a week, cuts should be across the board - I personally would have wrapped up Child Benefit with tax credits so that it is more fully means tested and reducing administration of two benefits.

 

[Mad Cyril]

As much as it pains me to say it this seems pretty fair.

Any family with one higher rate tax payer is not poor and shouldn't be receiving benefits.

 

[Usual_Suspect]

But is it fair that a household with one person earning 45k won't get it, but next door with two people earning 43k will get it? Surely it has to be worked out on the toal household income.

 

[McNasty]

Bring in China's law of only one child. Simples.

 

[londonblue]

But is it fair that a household with one person earning 45k won't get it, but next door with two people earning 43k will get it? Surely it has to be worked out on the toal household income.

Of course it isn't. And the Tory's attempt to justify it is even more ridiculous. They were saying the same is true in the tax system anyway. A person earning £45k pays higher rate tax, but next door there could be 2 people earning £25k and paying basic rate tax. So, these people that are already being hit, are going to be hit even harder!

What makes this worse is that we all know that the super rich will still receive this money because they avoid income tax. Once again the Tories are looking after their own.

If you're self employed it may be worth setting yourself up as a limited company. The company would pay 20% corporation tax. You then pay yourself a monthly dividend (rather than a salary) which is tax free. Then you'll still be entitled to this because you're not in any tax bracket!

 

[Napster]

The lesson here is get hitched to someone earning over £40k.

 

[sosman]

But is it fair that a household with one person earning 45k won't get it, but next door with two people earning 43k will get it? Surely it has to be worked out on the toal household income.

The problem with that is that means testing generally is an arse as all the form filling costs a huge amount in admin. So, the solution is to let HMRC do it all for you. Simples! Whereas, if it was as you suggest, then that huge advantage is binned. That's why it's simply down to higher rate tax payers ('HRT').

The easy way for them to have solved that would be for it to be on the claimants earnings, so that families with one high earner can elect the claimant to receive.

But that would massively impact on the savings made, because a huge percentage of the families effected would only have one HRT.

Another point is, what about people whose earnings vary or who lose their job mid-way through the tax year, so it becomes unclear whether they will become a HRT again? At what point do they get to claim it again?

Conclusion - it's a lot more bloody complicated that it looks. Not convinced it's been thought through, especially as they're already admitting they're going to have to modify the proposal, so I understand.

If you're self employed it may be worth setting yourself up as a limited company. The company would pay 20% corporation tax. You then pay yourself a monthly dividend (rather than a salary) which is tax free. Then you'll still be entitled to this because you're not in any tax bracket!

Unfortunately (and I do mean unfortunately, as my Mrs is in this position!) this isn't the case. Dividends are also taxed. Although the tax is lower than pay, your company will also have to pay corporation tax on top (with no tax free allowance), which as sole shareholder, you end up paying. So in fact I believe that you are marginally worse off doing it this way, although I think there's very little in it. The only advantage of doing this is that when you wind the company up, the money you receive (if there's cash at the bank or other assets) is a capital gain, so the first £9K odd is tax free.

 

[Uncle Leo]

But is it fair that a household with one person earning 45k won't get it, but next door with two people earning 43k will get it? Surely it has to be worked out on the toal household income.

No, that's daft (and it's also unfortunate that getting a pay rise from £43k to £44k could actually cost you money). Even though this particular move is going to hit me in the pocket (my wife is six months pregnant with twins) I'm broadly in agreement on it. If you're earning over the threshold, child benefit is a nice to have, but not a necessity*. I'd also like to see it scrapped for children over 16.


*Although ask me again when I'm buying 12,000 nappies a week

 

[Mad Cyril]

No, that's daft (and it's also unfortunate that getting a pay rise from £43k to £44k could actually cost you money). Even though this particular move is going to hit me in the pocket (my wife is six months pregnant with twins) I'm broadly in agreement on it. If you're earning over the threshold, child benefit is a nice to have, but not a necessity*. I'd also like to see it scrapped for children over 16.


*Although ask me again when I'm buying 12,000 nappies a week

With two kids it is a lot cheaper to fill a paddling pool with cat litter than to buy nappies.

 

[EastStandBlue]

No, that's daft (and it's also unfortunate that getting a pay rise from £43k to £44k could actually cost you money). Even though this particular move is going to hit me in the pocket (my wife is six months pregnant with twins) I'm broadly in agreement on it. If you're earning over the threshold, child benefit is a nice to have, but not a necessity*. I'd also like to see it scrapped for children over 16.


*Although ask me again when I'm buying 12,000 nappies a week

That's an interesting point... I was finishing school just as the Education Maintenance Allowance came in, that was supposed to reward students in non-compulsory education with a financial benefit as they weren't working. Around the same time, my parents seperated which, as you can imagine, reduced the gross income into the house as such. However, I wasn't entitled to EMA because it was means tested on the previous years gross income... It also wasn't based on studies you were doing. I knew a number of students in a similar boat to me who studied 5 A-Levels for a University place and wasn't rewarded, yet some scroat studied Leisure and Tourism for two years, barely attended and gladly lapped up the £30 a week for doing so... topped up with the wages they picked up on the occasions they worked while others were at college.

If you're going to cut child benefit for those over 16, then there'll be an increasing number of 16 year olds urged to work full time to support their families instead of studying to further themselves. Personally, I'd leave it at 18.

 

[Bob Cratchitt]

If you're going to cut child benefit for those over 16, then there'll be an increasing number of 16 year olds urged to work full time to support their families instead of studying to further themselves. Personally, I'd leave it at 18.

So the type of people who would ever consider taking on a job to help support the family are more likely to benefit from the on job training this route could provide, so is it such a bad thing?

 

[MrB]

I left school at 16 and I'm awesome.