Child Benefit

[surfymark]

I did a good search and came up with several threads but nothing particularly recent.

I don't really want to start a discussion over whether or not it is fair etc, I just wanted to know what is going on with it.

Back in October 2010 it was announced that Child Benefit would cease for high rate taxpayers in 2013.

My wife has for some reason got it into her head that this was brought forward to 2012 and that as of next month we will no longer be receiving any child benefit. I can't find anything about this by Googling or checking the HMRC website etc.

This isn't correct is it?

Is it still going ahead for 2013? I see a threshold of £44k. Our household income is not as high as this so will we still get it? Is it going to be stepped at all or is it simply a case of if you are over £44k, you don't get it, under that you get it all?

Many thanks
Mark

[mx stu]

Can't find anything more authoritative than the Telegraph (nothing on HMRC website) but:

Child benefit, which is worth £1,752 a year to a family with two children, will be stopped for all families that contain a higher-rate taxpayer from January 2013

http://www.telegraph.co.uk/finance/personalfinance...

[helmutlaang]

Criminal.

A person or couple who have done reasonably well for themselves in life and already pay a fortune in tax get nothing while others who have no intention of working,have never paid tax,punch out loads of kids then get paid for doing it.

I know someone will come along and say the higher tax payer can afford it,blah blah but why should people be peanalised of doing well for themselves?

This does not affect me BTW I have no kids but have 3 nieces under the age of 20 who have 5 kids between them and have never paid a penny towards this country but are happy to keep on breeding and claiming benefits.

Rant over...

[selwonk]

Indeed. It was a universal benefit, therefore it should be scrapped universally IMHO.

[surfymark]

mx stu said:

Can't find anything more authoritative than the Telegraph (nothing on HMRC website) but:

Child benefit, which is worth £1,752 a year to a family with two children, will be stopped for all families that contain a higher-rate taxpayer from January 2013

http://www.telegraph.co.uk/finance/personalfinance...

Thanks for this. Very interesting.

I wonder how this will work though to be honest.

I have just had a payrise leaving me just below the higher rate threshold. Assuming I get another payrise just before next January, I will probably be brought into the higher rate tax band. However, I have a second income but will be posting a reasonably large loss this year. Again assuming that I post a similar loss next year then I will probably go into 2013 below the higher rate of tax. However, HMRC won't know until mid-2013 or so (when I send in my return) whether I am in the high rate band for that year.

So will they stop our child benefit because of my salary? Will I be able to claim back the child benefit if they do this?

Also, does it only go on income tax as I will be looking to sell some of my "assets" and so will end up paying some Capital Gains tax.

Very complicated!

My wife doesn't earn either so it seems a bit unfair really (given that if I earned less and she earned anything below the high rate then we would still qualify - as the article says, we could earn up to £80k between us and still qualify).

Ah well I think I will start saving the child benefit separately so that if we lose it we won't really notice.

M

[z4me]

surfymark said:

My wife doesn't earn either so it seems a bit unfair really (given that if I earned less and she earned anything below the high rate then we would still qualify - as the article says, we could earn up to £80k between us and still qualify).

M

It's very unfair. You can just creep into the higher rate bracket, Mrs surfymark stays at home to look after kids, you get nowt. Another couple can each earn just below threshold, dump their kids on a child-minder, and get it. So unfair.

[Eric Mc]

I still fail to see why the state (i.e. me) should reward people for having children.

What is the ethical priniple behind such payments - apart from simple bribery of voters?

And if there is an ethical reason, it should only be paid to those who absolutely need it.

[SlidingSideways]

We have an ageing population. If people stop having kids, who's going to pay the tax in the years to come to fund your pension, healthcare etc..?
It's a small, but welcome, incentive/compensation for those that cease work/take reduced hours in order to produce our future generations.

Of course, the reality now is that it just encourages people who've never paid any tax to keep popping out kids that are unlikely to ever pay any tax. And the new change only hits exactly the people we should be encouraging to have children while the work-shy and feckless can continue to claim

[surfymark]

Eric Mc said:

I still fail to see why the state (i.e. me) should reward people for having children.

What is the ethical priniple behind such payments - apart from simple bribery of voters?

And if there is an ethical reason, it should only be paid to those who absolutely need it.

Didn't really want to get into this but seeing as my query has kind of been answered now...

I don't see it as rewarding people for having children but investing in our future. The ethical principle behind it (IMHO) is the same as investing in education. Of course that doesn't reward single adults either but it benefits society as a whole.

Ok so people in my position don't really "need" it but it helps me to provide the best possible opportunities for my children.

It is difficult for single adults to see the benefits in having children (I couldn't when I was younger) but the fact is that it is expensive in our society currently to have and keep children. An adult or a couple will be significantly worse off once they have a child and society would simply collapse if none of us has children.

My wife gave up her career to have children and I believe that her having children will benefit society in the longer term than if she had not done this. Yes she could go back to work but her salary before she left her career would not cover the childcare costs and my belief is that my children will benefit more from her being at home than being with a child minder.

M

[mx stu]

Eric Mc said:

I still fail to see why the state (i.e. me) should reward people for having children.

Well in the worse case scenario if people didn't have children because there was no reward (now i'm not saying that people only have children for the child benefit!) or if less children were born because people couldn't afford to then the whole 'system' collapses - look at Italy alot of their problems stem from the fact it has an ageing population with low birth rates.

The thing to remember Eric is that 'we are all in this together'. It will hurt us losing child benefit. Without making too many assumptions hows your winter fuel allowance payment? Hows your practice structured? paying yourself c.£6k a year and supplementing your income with dividends? Got your wife on the books in an 'administrative role'?

For the record we're in a similar situation to the above and I would just say that the £80 we receive every 4 weeks is spent on nappies, clothes, shoes and food for our daughter and as such goes straight back into the economy.

It's going to be an administrative nightmare to enforce and I look forward to seeing how it actually works, in practice.

[Eric Mc]

So people only do "the right thing" if they get a tax break or a state hand-out?

If that is the case, what a miserable, mercenary bunch we are.

[bobbylondonuk]

Restrict the benefit to 2 kids per woman and price the whole amount eg.(£20x52 weeks) into her personal allowance. Job done! To get that benefit..you have to be earning and you dont pay tax+ni for earnings including the benfit.

Sensible....rewarding for good behaviour...less cost to employers.....less admin cost to tax payers.

Nope...wont happen.

[KrazyIvan]

Eric Mc said:

So people only do "the right thing" if they get a tax break or a state hand-out?

If that is the case, what a miserable, mercenary bunch we are.

Does that count for single person tax allowance, or the single person rebate on council tax. There are plenty of tax breaks and benefits that target one specific group that may leave others feeling unfairly treated by.

Look at it this way, The average working parent (there are still a few of us around) will be spending more, because of their children, on needed items that will have VAT on them. I know I spend more on my kids and as such pay more in VAT on an average month then I get back in Child benefits so you’re not "paying" for mine at least

[surfymark]

Eric Mc said:

So people only do "the right thing" if they get a tax break or a state hand-out?

If that is the case, what a miserable, mercenary bunch we are.

Absolutely not. People will still have children no matter what. It did not influence our decision in any way at all.

It is all about looking after society as a whole.

People will have children and then find they can't give them what they need. The state is set up to help people such as those.

If we didn't have state education, I would still have had children and then work out a way to educate my children. Society would lose out as those that couldn't work out a way to educate those children would bring up uneducated children.

M

[Countdown]

Eric Mc said:

If that is the case, what a miserable, mercenary bunch we are.

As individuals we are all very mercenary by nature. Its only once all our needs are fully satiated that most of us will start thinking about the welfare of others.

That's why the State needs to exist - to work for the "Greater Good".

[SlidingSideways]

mx stu said:

It's going to be an administrative nightmare to enforce and I look forward to seeing how it actually works, in practice.

Yep, all the money "saved" by not paying it to people with a higher rate tax payer in the household is going to be swallowed by the cost of administering it. That'll shrink the deficit Mr Cameron!

Eric Mc said:

So people only do "the right thing" if they get a tax break or a state hand-out?
If that is the case, what a miserable, mercenary bunch we are.

That's one way of looking at it. The other way is being rewarded for doing "the right thing".
We'd have had them anyway, but CB took a little of the sting out of losing 50% of my wife's income.

[z4me]

bobbylondonuk said:

Restrict the benefit to 2 kids per woman and price the whole amount eg.(£20x52 weeks) into her personal allowance. Job done! To get that benefit..you have to be earning and you dont pay tax+ni for earnings including the benfit.

Nope...wont happen.

How's that going to help surfymark's wife? She's done the right thing bringing her own children up, and he'll be penalised for it.

[Eric Mc]

I am being a bit provocative here as there are valid arguments either way.

PHers often express a wish for simplification of the tax and benefit system - except when they lose out in any such simplification.

Although in this case the system is being "means tested", which is a further complication rather than a simplification.

[bobbylondonuk]

z4me said:

bobbylondonuk said:

Restrict the benefit to 2 kids per woman and price the whole amount eg.(£20x52 weeks) into her personal allowance. Job done! To get that benefit..you have to be earning and you dont pay tax+ni for earnings including the benfit.

Nope...wont happen.

How's that going to help surfymark's wife? She's done the right thing bringing her own children up, and he'll be penalised for it.

CMD wants to reward couples who do the right thing...so file a joint return at the yr end. Claim wife's personal allowance + child benefit against taxable income and get a big fat cheque back! kerching! Now it feels good working hard, making money and having a spouse look after the house and kids with no income of her own!

[surfymark]

bobbylondonuk said:

CMD wants to reward couples who do the right thing...so file a joint return at the yr end. Claim wife's personal allowance + child benefit against taxable income and get a big fat cheque back! kerching! Now it feels good working hard, making money and having a spouse look after the house and kids with no income of her own!

Can you do a Joint Return? We have always done separate ones but we don't take advantage of my wife's allowance at all. Would a Joint Return allow us to do this?

Not heard of it before.

M