[Closed] child benefit..

What about those who are not working for one reason or another?

Universal benefits reduce the poverty trap of high marginal tax rates nad increase uptake

Isn't one of the main points of universal benefits that they are less costly to administer as they require far less checking and policing?

Not much point* in adding new entitlement rules if those rules cost more to administer than they save.

* other than political point scoring.

Do away with it and add it to Child Tax Credits. Why have two benefits when one would do?

isnt that what benefits are for?

You fool! Have you not been reading your Daily Mail? Benefits are there to keep contraceptive-averse, workshy layabouts in Carlsberg and Lambert and Butler

Some interesting points on this discussed on R4 this am.

Including the comment, IIRC, "modest incomes" in relation to those just over the 40% threshold - such thoughts bound to be incendiary on here!!!

FWIW I agree, it's about time the spotlight was shone on the 40% threshold. Lots of ordinary folk caught by this now are by no means well off. Too much focus on the very influential 50% tax payers.

UK tax needs a root and branch review and overhaul

Yep.. scrap it and increase the benefit threshold to cover the difference.. no extra costs would be involved and a massive saving in payouts and administration.

elzorillo - Member
Yep.. scrap it and increase the benefit threshold to cover the difference.. [b]no extra costs would be involved[/b] and a massive saving in payouts and administration.

Let's see your sums then.

The child benefit as we have it today has been in force since the 70's as I understand it. I did hear a couple of years ago that the UK has had some sort of universal benefit since the 1700's in one form or other, to recognise the cost in bringing future resource in to the economy.

It is cheap to administrate and is a benefit to people on a wide range of salary levels and the way that it is paid directly to the mother lifts the welfare standards of millions of kids.

I do think it should be capped at two or three children but I would hate to think that it fundamentally changed.

rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

Elzorillo - that leads to massive marginal tax rates as you hit the benefices threshold. IE every £ you earn you only get a few pence this destroying incentives to work.

Rikk01 - I do agree major overhaul is needed and massive simplification with an integrated tax and benefits system - or positve and negative income tax perhpas ( but not freidmans flat rate 🙂 )

http://en.wikipedia.org/wiki/Negative_income_tax

Do away with [b]all[/b] of the directly paid benefits and adjust your tax code to take account of kids etc.

This would mean that some people end up with a negative tax code (in which case they get money back) - for everyone else, they just get a reduction in tax collected form their wages.

easy peasy.

Or why not have a phased reduction leading to withdrawl over the next ten years?

Jesus - me and TJ in agreement 😯

(and we must have been typing that at the same time...)

rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

£40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

Surely it's relative to where you live (and which side of the property boom you were on). I don't feel very well off.....

Lifer - Member

Let's see your sums then.

So an increase in the benefit threshold increases admin costs?

Oh Dear God! Run! Run! Save yourselves!!!! I think the interweb may be about to implode

Do away with all of the directly paid benefits and adjust your tax code to take account of kids etc.
This would mean that some people end up with a negative tax code (in which case they get money back) - for everyone else, they just get a reduction in tax collected form their wages.
easy peasy.

Nobody in my household has a tax code

Do you live in Greece?

rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

Doesn't the [url= http://www.hmrc.gov.uk/rates/it.htm ]40% higher rate tax start at £35k[/url]?

I believe [url= http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/ashe-results-2011/ashe-statistical-bulletin-2011.html ]Median UK wage is £26,200[/url].

So seems to me you could be earning £35,001 and be a higher rate tax payer but, due to regional pricing, have less disposable income than someone earning the median wage in a cheaper area, who will also then qualify for these benefits.

35k over tax free allowance

£35 000 taxable income - so its £35 000+ your basic few thousand ie well over £40 000.

You are still in the top 10% (roughly)of earners therefore well off.
http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

rkk01 £40 000 pa puts you in the top ten percent of earners [s]so by definition very well off as[/s] 90% of the working population earn less

Let's separate fact from interpretation... Yes, in terms of percentile groupings on earnings, but that approach only looks at earned income.

As someone posted (on the 50% upper rate thread???) that upper decile is where the net tax take starts to outstrip the "benefits" received...

BUT, that top decile covers a very long statistical tail, from "modestly" well off / comfortable to the super-rich. Being just in to the 40% bracket is not a very comfortable place to be.

£35 000 taxable income - so its £35 000+ your basic few thousand ie well over £40 000.

You are still in the top 10% (roughly)of earners therefore well off.

And what about assets...

Be nice to be sitting on mostly mortgage free property, I could afford to earn less then....

Being just in to the 40% bracket is not a very comfortable place to be.

Better off than 90% of the population tho.

Are you really trying to claim that only the richest few % of the population are "well off"

Ah right, sorry forgot about "taxable" bit.

Point stands though, £42k in London is a considerably more "average" wage than £42k in the North East.

And we've not even got into the whole rankle of households with two incomes just below the higher rate, which seems to be the major flaw in the proposed child benefit change.

Are you really trying to claim that only the richest few % of the population are "well off"

I can only comment on my own experience. I suspect a strong polarisation - both of opinion and of actual feeling of "well-off".

My guess would be, that at earnings somewhere above 80-100k, the additional disposable proportion of income really does start to manifest itself. Depends where you live of course, and whether property is paid for / mortgaged etc.

I also suspect that at the other end of the spectrum, whilst certainly not "well-off", there will be families who might be "surprised" at the level of provision that they receive compared to others who are earning...

After all, the furore about the £26k (?) benefits cap was quite enlightening. What does 26k after tax equate to as an earned gross salary equivalent? - must be somewhere in the mid 30s????

One place I would not envy being is single and earning mid-low £teens - and there are plenty of jobs in the uK economy within this bracket

No the point does not stand at all. £42 000 puts you into the well off bracket wherever you live.

You are still in the top 10% (roughly)of earners therefore well off.

Didn't a recent IFS announcement say that something like 25% of workers would be paying higher rate tax within the next few years?

"It’s not so long ago that only about one in 20 taxpayers were paying the higher rate. We think that within three or four years that’s going to be one in four or one in five, so this is a very, very big change.’"
-- Paul Johnson, Director at IFS as quoted in, ahem, [url= http://www.****/news/article-1352346/Millions-hit-40-tax-Quarter-workers-higher-rate-taxpayers-2015.html ]The Daily Mail[/url]

Having gone from 40% to 20%, I can assure you that the former is a lot more comfortable.

No the point does not stand at all. £42 000 puts you into the well off bracket wherever you live.

A typical London Weighting is 15-20% of basic salary, to account for increased living costs. Hence £42k - 20% leaves you with less money than someone on the lower rate in a lower cost area who does receive the benefits.

No the point does not stand at all. £42 000 puts you into the well off bracket wherever you live.

I'm afraid this argument does not stand up at all...

42k in part of the country where accomodation costs are measured in hundreds, then yes, quite likely that person will feel comfortably off.

42k in an area with very high accomodation costs - then no, not well off.

My BiL left the UK for the US as he could not afford to support his family. He was above the 40% threshold, and his wife was working parttime around childcare / nursery hours etc.

The industry he works in coalesced around SE England, and he was forced to move there with his job. He could not afford to buy, and private rents on family homes were stupid money.

So yes, his earnings were top 10%, but his disposable income was very low.

typical london weighting is not 15 - 20 % of salery! Nor are london costs that much higher than many other cities.

Its still irrelevant - £42000 earnings put you in the richest 10% of the population therefore very well off.

If you earn £40k in 2011/12 from all sources and you are under 65 then your taxable income is £40k minus your basic allowance of £7,475.
You wil then have £32,525 taxable income.
You are in the 20% tax bracket not the 40% so you will pay 20% on £32,525
You need to be earning about £42,500 to get into the higher rate.

My main objection to the proposals is that it's one person over the 40% threshold. I'm just over but my wife is unemployed. We can't use her tax allowance at all, she can't claim benefits and we've lost child tax credits. In January we'll lose child benefit too.

Also, wealth isn't solely about income - my wage is good now but the costs I've incurred getting here are high and are still being repaid. They weren't tax deductible either (in the main).

typical london weighting is not 15 - 20 % of salery!

Isn't it? Seemed to be about that on my quick Google of salaries of civil servant and other public service roles that offer a weighting.

rkk01 makes the point well. You can be taking home £3000 a month, but if your rent/mortgage is £2000 and your bills £750 then you're not really as "very well off" as someone on less income in a cheaper area.

Rikk - sorry it does add up - its just your expectations are unrealistic as are your comparisons.

How on earth do you thing public servants and manual workers survive? You know - people earning half what you think is not well off?

Didn't a recent IFS announcement say that something like 25% of workers would be paying higher rate tax within the next few years?

Thats because the 40% tax band starts at £35,001 in 2011/12 wheras previously it was £37,401.

and £34,371 for 2012-13

Of taxable income - allowances are rising as well so you will still need to be earning £42 000+ to pay 40%

Rikk - sorry it does add up - its just your expectations are unrealistic as are your comparisons.

BiL's expectations were to be able to feed his family, and at just over the 40% threshold he struggled - so much so, that he took his expertise out of the UK. He was earning a good salary, but it wasn't sufficient in terms of family housing availability and cost.

I don't think his expectations were unrealistic. His lifestyle was pretty modest, ran 2 old cars, no foreign holidays. IIRC his budget for going out / mtb / other hobbies etc was £50pm!!!

Any discussion of wealth HAS to consider both income and outgoings.

ETa - Just to put some estimated numbers to this...

42k - approx 2576 pm take home
26k (median) approx 1670 pm take home

So about 900 pm difference - which could very easily be swallowed up in fixed costs

OTH, if that 26k is at the benefit cap level, and not taxed, surely that is close to 35k pa of earned, taxable income.....

So how do you think people in the south east living on average or below average earnings manage?

sorry - to claim not to be able to live on his £42 000+ and her few thousand on top is ridiculous

Rikk - sorry it does add up - its just your expectations are unrealistic as are your comparisons.

How on earth do you thing public servants and manual workers survive? You know - people earning half what you think is not well off?

Yep, it sucked.

And I thought when I earnt more I'd be better off. Bills just get bigger.

The most significant differentiator in my experience is when someone got on the property ladder. I know people who earn a third of what I do and have far more disposable income.

So how do you think people in the south east living on average or below average earnings manage?

I dont doubt some / many will be struggling. I'm just trying to illustrate that being a 40% tax payer does not equate to "wealth". You need to look at income and expenditure.

From my experience many people on lower salaries do have a higher level of disposable income, despite lower earnings. I guess their fixed committments are less

Meanwhile, back to child benefit, one thing is sure...

The Govt have painted themselves into a pretty messy corner

So how do you think people in the south east living on average or below average earnings manage?

Median Gross Weekly Wage in the UK is ~£500

But it is lower than that in every region in the UK, [i]except[/i] South East and that London. In that London the median is £651 !

Yeah I think your definition of "well off" may be different than some TJ.

When you say:

How on earth do you thing public servants and manual workers survive? You know - people earning half what you think is not well off?

I personally wouldn't consider "well off" to be earning twice what someone can just "survive" on, especially when they also have benefits and tax relief that you don't get.

It might be "comfortable", but it's hardly the Millionaire's Row you portray it as.

b r - Edinburgh is a cheap city? By what comparison?

well here oop north if you earn 42.5k before tax your a millionaire..those living here and travalling to that london each week are bill gates esque.. we have two on our modest rochdale street.. mrs dont work and boosts local economy by driving everywhere in 61 plate range rover/ audi estate and graciously attend school coffee mornings..... need an extra score a week to feed little billy.. i dont think so.

Presumably

mrs dont work + driving everywhere in 61 plate range rover/ audi estate

= much, much more than 43.5k......

Summary of what was on R4 [url= http://www.bbc.co.uk/news/uk-politics-17256946 ]link[/url]

Will somebody please square the iniquitous circle of 2 people earning £39 k and getting paid by the state for having one child yet a household with one earner on £40K and a partner looking after 3 children gets nothing.Do the arithmetic!No Range Rover Parked outside our flat!
Don't hear many calls for capping NHS treatment for those earning over £40k.

Its important not to confuse individual salaries with household income. A net, combined [i]household[/i] income of £40,000 puts you in the top 10%.

Where there has been bickering in the media about households where both earners earn just under the proposed cut-off for benefit - this hypothetical household would just scrape into the top 1% of richest households.

While a median salary of £26k gets banded about, 50% of [i]households[/i] have a net income of £20k or less, a third of households have a combined income of less than £15k.

As I mentioned earlier, not all income is salaried, mine isn't. Not all salaried work is full time, or permanent either

Going back to the original post - wasn't child benefit paid separately so it could be given directly to the mother to pay for things like food rather than going into the fathers pocket (and straight to the pub with it?

Anyway, it'll cost more to administer a revised policy than just give it to a couple of billionaires...

Anyway, it'll cost more to administer a revised policy than just give it to a couple of billionaires...

But there are ways it doesnt have to cost more.. Simply withdraw it all together and increase the benefits cap.

interesting question rkk01, range rovers are circa 750pcm to lease so not an issue if your gross is plus 42.5 pa.. as i'd assume take home would be min. 2.5k a month.
even a cracking 4 bed detached on our rochdale street is 330k max so all will have low or none existant mortgage, as 80% of neighbours have been here since built 10yrs ago when they were half that price..

Not again TJ. We did this last time. This is what you should be focusing on:

maccruiskeen - Member
Its important not to confuse individual salaries with household income. A net, combined household income of £40,000 puts you in the top 10%.

Where there has been bickering in the media about households where both earners earn just under the proposed cut-off for benefit - this hypothetical household would just scrape into the top 1% of richest households.

While a median salary of £26k gets banded about, 50% of households have a net income of £20k or less, a third of households have a combined income of less than £15k.

As I mentioned earlier, not all income is salaried, mine isn't. Not all salaried work is full time, or permanent either

And take into account the cost of living in different place. A UK average is pretty meaningless.

macruiseeen - also a gross earnings of £42 000 puts you in the top ten % of earners. Check the WIKI link

Not matter how you try to distort it if you are earning enough money to get into the 40% tax band you are a part of the wealthiest minority in the UK

What if you're not on benefits?

Surely the govt. could easily make up the revenue by taxing the top 1% a fraction of a % more.
Or by taxing a bit more those true running dogs of capitailsm -second property owners and those with income from property.Or maybe stop EU migrants claiming benefit? There are a lot more groups in society that could be taxed more with little or no effect to their standard of living so why take money off our children?
If the economy was doing well we would all be talking about spending more public money and/or tax cuts.

TandemJeremy - Member
macruiseeen - also a gross earnings of £42 000 puts you in the top ten % of earners. Check the WIKI link

Not matter how you try to distort it if you are earning enough money to get into the 40% tax band you are a part of the wealthiest minority in the UK

That doesn't mean things are comfortable for everyone in that band, nor that losing child benefit would have an impact.

All of that aside, before the election the tories said they wouldn't scrap child benefit. If i'd decided to have a child, worked out if it was affordable (inc CB) i'd be pretty annoyed if it was going to be taken away.

Back in the days when child benefit was introduced there was a real need for it, but many decades of rising living standards later, can it still be justified? I think not. In the depths of my old shed I have a slowly rusting tin dating from the early sixties that once contained state-issued milk powder for infants, I may well have drunk some of it. AFAIK the state doesn't issue tins of milk powder anymore so shouldn't the child benefit be reduced over the next decade, then be abolished?

Not matter how you try to distort it if you are earning enough money to get into the 40% tax band you are a part of the wealthiest minority in the UK

If you are ignoring location and living costs then you might as well go the whole hog and argue that [u]everyone[/u] in the UK is "well off".

Even the very poorest in the UK are very wealthy on the global scale.

ohnohesback - Member

Back in the days when child benefit was introduced there was a real need for it, but many decades of rising living standards later, can it still be justified?

Surely most people can afford private health insurance too so let's bin the NHS while we're at it.Insurance is less than the price of a family holiday abroad...

Graham - eve if you include living costs yo are still well off - how can you be in the top 10% of earners and not be?

Most of the population will never get anywhere near that level of income

4 bed detached on our rochdale street is 330k max so all will have low or none existant mortgage

ahh, that's ok then...

I didn't realise 330k houses were so easily affordable 😯

I couldn't afford anything like a 330k house!!!
That's a salary multiple of over 7x the higher rate threshold.....

80% of neighbours have been here since built 10yrs ago when they were half that price

THIS - This is an aspect overlooked by TJ (and others).

If you've lived in an area for a long while, family / family property in the area, ridden the house price increase etc, then 42.5k probably feels very comfortably off.

If you've moved to a new area for work, starting from fresh, then that is a very different position.

What are current mortgage multiples? Back to 3x salary? So a 40% tax payer could have a mortgage for 120k???? Well off my backside 😯

Graham - eve if you include living costs yo are still well off - how can you be in the top 10% of earners and not be?

The point was that living costs and other considerations mean that people receiving the benefits can end up more "well off" than people on higher incomes.

As rkk01 pointed out, you can be a top 10% earner but have significant enough outgoings that you have no disposable income.

Just pointing out the inherent flaws in basing UK wide tax decisions purely off personal income and national averages.

Thought you of all people would understand the need for the northern provinces to have more control of their own tax affairs due to different circumstances? 😀

Most of the population will never get anywhere near that level of income

As mentioned earlier, IFS say as many as 1-in-4 workers will be higher rate tax payers in a couple of years. So it is a pretty significant minority, not some rich elite.

The point was that living costs and other considerations mean that people receiving the benefits can end up more "well off" than people on higher incomes.

Rubbish - simply not possible unless you pay ridiculous amounts for housing

As rkk01 pointed out, you can be a top 10% earner but have significant enough outgoings that you have no disposable income.

Again - only if you make stupid choices

Just pointing out the inherent flaws in basing UK wide tax decisions purely off personal income and national averages.

so you should get taxed less because you earn more than 90% of the country and want to live in an expensive house?

some of you guys need a reality check badly.

Surely the govt. could easily make up the revenue by taxing the top 1% a fraction of a % more

Rubbish - simply not possible unless you pay ridiculous amounts for housing...
...Again - only if you make stupid choices

Have you ever looked at house prices TJ?
The average UK price for a [u]flat[/u] is £221,054 and that's in the middle of a housing bust.

Some folk have to move for their jobs. Sometimes, as in rkk01's example, that can mean moving somewhere where houses are really chuffin expensive.

Obviously sticking with a job and moving with it is a "stupid choice"?

so you should get taxed less because you earn more than 90% of the country and want to live in an expensive house?

I don't recall anyone saying that.

My point, as I already said, was that there are large regional variations in living costs and that basing benefits and taxation decisions on personal (rather than household) income in relation to skewed UK-wide averages, without any consideration for outgoings and living costs is a fairly flawed system.

Rubbish - simply not possible unless you pay ridiculous amounts for housing

In many parts of the country that is the choice... 🙄

Again - only if you make stupid choices

See above - many choices are pretty limited, and incur costs other ways. We chose not to live in Cardiff because of house prices. Living outside of the city requires outlay (money and time) on travel.

so you should get taxed less because you earn more than 90% of the country and want to live in an expensive house?

And how much is an "expensive house" - Go on, I'm interested...

Well earlier in this I thought I would have a look to see what was so expensive about the south east that you have to earn so much to afford to live there.

I looked in Romford as its where my dad lived for a part of his childhood. a perfectly acceptable 3 bed semi could be rented for £1000 a month - £850 for a cheap one.

So that would seem that reasonable priced accommodation is available in the south east.

Rubbish - simply not possible unless you pay ridiculous amounts for housing

In many parts of the country that is the choice...

The paradox with housing is the price is what the buyer makes it, - a house costs what it costs because the person that bought it was prepared to pay more for it than anybody else

Have you ever looked at house prices TJ?
The average UK price for a flat is £221,054 and that's in the middle of a housing bust.

a perfectly acceptable 3 bed semi could be rented for £1000 a month - £850 for a cheap one.
So that would seem that reasonable priced accommodation is available in the south east.

Meantime a perfectly acceptable 3 bed semi can be had round this way for £450 a month.

If you're buying then an average semi in the South East is £247k, versus £135k round here (Northumberland).

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

With regards to Child Benefit, surely it's the income of a household, not that of an individual that is relevant. The fact that it may be one earner bringing in 42.5k, or two earners bring in that amount (or more) jointly seems irrelevant.

I would agree that households bringing in over 42.5k can live without it, but I don't agree with bringing in a law that discriminates between "households" in this way.

Maybe if second properties were taxed more then they would be less attractive to own

Yes, a lot of people getting rich from renting out properties 😆

... and if your buying, even £135k is still above the 3x mortgage income multiple for someone just above the 40% threshold.

Just a thought on a tax raising measure.
In Spain if you buy a house you'll pay around 7% purchase tax,depending on the region.
The buyer prices this into the offer they make,as no one pays the asking price.The buyer does not notice the tax as they should have accounted for it in the offer.The seller gets a lower than asking price but overvalued it to start with.
The tax raised goes direct to the local governement and keeps the council tax down to levels we can only fantasise about in the UK.

The tax raised goes direct to the local governement officer and keeps [s]the council tax down to levels we can only fantasise about in the UK[/s] him in a life of luxury.

[img] [/img]
😉

joeegg: sounds like Stamp Duty Land Tax in the UK, but a local tax rather than central?

In Spain you'll pay the equivalent of VAT plus a tax for change of ownership plus another tax AJD that I'm not sure about. It's different.