child benefit..

I thought child benefit for such high earners basically paid for iPads/bikes/skiing holidays etc ?

🙂 I’ve said multiple times that I’m not against high income households losing Child Benefit. But it needs to be done fairly.

Using individual tax bracket as the basis for the cut is not fair, as some of those will be household with income significantly less than the national average, while far wealthier households will retain the benefit.

Let’s take childcare costs, then.

A very REAL financial burden for very many families. What are the alternatives?

– Not have kids. OK, works for some folks. Wouldn’t do for everyone. Huge financial benefit – smaller house or flat, lower transport costs, prob not need car etc.

– Pay for nursery / childminder. As above ^, costs are similar either way, and £500 per child per month doesn’t seem to be out of the ordinary. Of course, if you are on low income / benefits, you get this paid for by the state, so this is one area where the higher rate payer gets to pay for stuff that others get for free. I have no problem with that, except that based on some folks known to us – it is widely abused.

– Use friends / parents. May be ok on an occaisional basis. However, I think every single one of my colleagues with kids have had to move away from their family home town / area for their career. As an ambitious single professsional this is a no-brainer. As a parent it is something to look back on and, perhaps, re-consider… ETA, my parent are too old for this anyway.

– One partner to give up work. Doesn’t work for single parents, and it’s a reflection of the failing benefits / work culture rather than on the individual parent. As NZcol alluded, something is badly wrong with the system when you can be better off by not going to work.

So yes, kids are a lifestyle choice, as is moving away from home – but put them together and the costs really start to rack up.

This isn’t some sort of false or deluded reality for a few forum whingers on STW.

It is reality for very many families – that I know directly and as reported in the news media.

– Not have kids. OK, works for some folks

……. and who – pray – would pay TJs pension in the future because there isn’t a pension pot you know?

ah, see, that’s stumped you

The kicker is of course that TJ’s first post stated that he was IN FAVOUR of universal Child Benefit as “Universal benefits reduce the poverty trap of high marginal tax rates and increase uptake”.

It’s almost like he changes his mind just to have an argument…

With all due respect TJ, at a slight stretch I could use much of the same silly emotive language against you on the pensions thread… Stick to the facts, eh…

Child care costs: £500 per month per child.

If you have more than 1 child, employ a nanny. A friend does for £8K for 1 child. Plus there is no running backwards and forwards, being late, etc. And it’s tax deductable.

Well… someone in a 42k job may well have to fork out for things like membership of professional bodies, training and industry exams for instance.

They may need to spend more on suits etc as they could be meeting important clients. They may need a decent car for the same reason.

All tax deductable. And mostly paid for by employers.

A friend does for £8K for 1 child.

Erm.. so isn’t that £666 a month then, per child? *confused*

All tax deductable. And mostly paid for by employers.

Depends really. Speaking for my missus (who has some expenses like these), some of it is tax deductible and none of it is paid for by her employer (NHS).

Erm.. so isn’t that £666 a month then, per child? *confused*

I think it’d still be £8k for two kids. So, £333 per child.

And mostly paid for by employers

Many employers will pay for one professional membership subscription. as for the rest off it – self employed directors are able to claim it back against tax, never come across PAYE employees who have been able to

I think it’d still be £8k for two kids. So, £333 per child.

Ah right. That works. Slightly odd pricing structure though. 😕

never come across PAYE employees who have been able to

You can do it as part of a tax return.

A friend does for £8K for 1 child

Crumbs, the going rate for a nanny in South West London is £30K.

As NZcol alluded, something is badly wrong with the system when you can be better off by not going to work.

Aye wages are dreadfully low and we dont pay enough taxes to offset the cost of childcare. It’s BS to claim you are better of out of work as the system is now weighted to make sur ethis can almost never happen – its what working family tax credits do basically. – you need to do few hours and have load of kids iirc to be worse off

We could of course employ the Danish system where by the state highly subsidises all nuresry places, maternity leave can be split between parents and the cost can never be more than 10 % of your salary…then again they do pay 50 % tax to achieve this.

£8k – that must be below minimum wage

working tax credits – so the tax payer can subsidise employers

ITs BS to claim you are better of outof owrk as the system is notw eighted to make sur ethis can almost never happen – its what working family tax credits do basically.

Not BS at all… from this thread, it sounds as if there are a number of families where it is a close call regarding the second earners salary vs childcare costs.

From our own experience, before mrs rkk01 re-trained as a teacher, her pre-child birth earnings would not have covered child-care. The general month to month just about worked, but the childcare costs for school summer holiay periods made working un-viable.

It’s BS to claim you are better of out of work

I think many parents see that high childcare costs mean they are better off if one of them quits work and stays at home looking after the kids.

Mate of mine just did exactly that. Quit his job and pulled his daughter out of nursery.

Not an option for single parent families obviously.

£500 for childcare?

Full time nursery for our youngest is £900 per month and that is after a 20% reduction because Mrs Mcavennie works for the company that owns the nursery.

Thing is I have never said that having kids was not a lifestyle choice, or that we were badly off. However, we are not well enough off to lose £140 per month, just like that – as part of the lifestyle choice you look at how much things cost and what you have coming in.

It is certainly not fair to lose the child benefit because one of our incomes may creep above the £42k when other people earning £82k keep it.

scott_mcavennie2 – Member

Thing is I have never said that having kids was not a lifestyle choice, or that we were badly off. However, we are not well enough off to lose £140 per month, just like that

especially when you’re told it won’t be removed:

“I wouldn’t change child benefit, I wouldn’t means test it, I don’t think that is a good idea” (David Cameron, 5 March 2010)

£900 per month

Ouch!

TJ will be along in a minute to explain to you why your life isn’t reality.

Nice quote CaptJon.

Call Me Dave really is a snide little git isn’t he?

GrahamS – Member

The kicker is of course that TJ’s first post stated that he was IN FAVOUR of universal Child Benefit as “Universal benefits reduce the poverty trap of high marginal tax rates and increase uptake”.

It’s almost like he changes his mind just to have an argument…

Not at all – I can agree with you over that and still be able to call your bullshine that £42000 pa is barely enough to live on.

It really is laughable how you can claim this is so and then try to justify it by bleating about your high living cost when the things you are claiming as high living costs simply are unaffordable to the vast majority of people – however the cheap alternatives are beneath you.

Renting flats in a cheaper areas and working shift work opposite to your partner – which saves the two main costs you complain of is simply rejected out of hand.

We pay for a childminder that has just decided to pop up her charges by 50p an hour for our little lad. Now paying 146.25 per week for 32.5 hours childcare, all payable monthly in advance.

With the impending Child Tax Credit cuts this will seriously damage our finances as a family to near breaking point now, just trying to get through it is hard. April will be a trying time for us, not even been told what we will get cut to if indeed we will.

We both work because we have to, there is no other choice at all.

Bigbloke – are you in the 40% tax band? or are you living in the reality that most of us are of average wages or less?

God no not in the 40% tax band. I consider myself/wife as average possibly below average to be fair at a combined basic work income before tax of £40k-£42k a year.

your bullshine that £42000 pa is barely enough to live on.

I didn’t say that. I pointed out that if that is your only household income then you are below the national average household income, and only a bit above the median.

i.e. quite far from the “well off” “top 10% wealthiest people in the UK” nonsense.

Hence, some people can be earning £42k will still feel the pinch of losing these benefits.

Somehow I doubt you’d find this quite so “laughable” if I was talking about a couple of Band 3/4 nurses who sometimes found things a bit tight on their combined salary.

Despite the fact they’d actually be taking home more than Mrs £42k and they’d still be entitled to benefits on top of that.

Renting flats in a cheaper areas and working shift work opposite to your partner – which saves the two main costs you complain of is simply rejected out of hand.

I didn’t reject them – I said how can you claim someone is “well off” “wealthy” “top 10%” and then admit that to get by they might need to give up property ownership, rent somewhere smaller in a cheaper and change career to one with night shifts??

God no not in the 40% tax band. I consider myself/wife as average possibly below average to be fair at a combined basic work income before tax of £40k-£42k a year.

You’re not effected then.

I may be by the time it’s due, I will make adjustments to compensate for losing this. Cancelling the eldest’s swimming lessons being one she can swim well now so they’ve fulfilled what we started them for. I don’t mind but what I do mind is that because of my wage I will probably lose it but others on a much higher combined income than me by about £20k can keep it. That’s what makes this method of doing it unfair not that I should keep it, I don’t need it but it’s very handy as my wife works part time to help with the childcare issues. It pays for the likes of swimming lessons, shoes, uniforms, school trips and their school meals.

How can I claim that – because it is the simple truth

earning £42000+ puts you in the top 10% of earners and therefore amongst the wealthiest in the country.

If its your only household income then you do not have childcare costs unless you are a single parent

Big bloke, we had a letter recently saying household income over 26k makes you ineligible for CTC. Not sure how this would affect the childcare portion discount stuff, but i would reckon you would be ruled out of that too. Can you or your partner get the tax free childcare vouchers through work?

Surely we need to encourage those in the higher tax bands to procreate and expande the gene pool with their talents that have made them higher rate tax payers? Not saying all higher rate tax payers are intelligent, I mean there are footballers, and bankers….oh hang on, maybe not such a good idea.

How about giving enhanced child benefit to graduates?

The gene pool will benefit from their intellect, as things stand anyone graduating in the past 10 years can probably ill afford to have kids.

Bit of government eugenics needed?

Not BS at all… from this thread, it sounds as if there are a number of families where it is a close call regarding the second earners salary vs childcare costs.

yes that is a reasonable point but they are not on benefits so it is not really a counter to my point.
I did suggest the denmark model with 50 % tax to resolve this issue but it has not had many takers so far.

Go into the JC + and they will do you a calculation [ they call it the better off calculation FWIW ] and tell you how much better or worse of you will be…just take your NI details.

I didn’t say that. I pointed out that if that is your only household income then you are below the national average household income, and only a bit above the median.

i.e. quite far from the “well off” “top 10% wealthiest people in the UK” nonsense.

Hence, some people can be earning £42k will still feel the pinch of losing these benefits.
you are still back to comparing individuals with households..it is hardly surprising more than one person earns more than one person on average. Individually you are still in that 10 % – it really just depends how you look at it.
The cliff edge is clearly unfair and clearly household income makes more sense as the cut off point to avoid the occasional [ anyone any idea what % it is the case that one higher tax earner is worse off than two non or what is the average household income where at least one earner is in the higher tax rate?. It will be above the average I assume.

we had a letter recently saying household income over 26k makes you ineligible for CTC.

Well I never, Ernie has got his hands on the Cycle Touring Club.

If its your only household income then you do not have childcare costs unless you are a single parent

That wouldn’t be quite true for us TJ. I’d like to send our daughter to nursery for say 1 day a week at some point, but my wife would be the main carer and possibly jobless. That’s a choice though, like many things. Lucinda may have to give up her pony 😯

If its your only household income then you do not have childcare costs unless you are a single parent

Only if said stay at home parent sits in an unheated house with their child all day and doesn’t go anywhere / do anything with them. Childcare costs even if you DIY.

I consider myself/wife as average possibly below average to be fair at a combined basic work income before tax of £40k-£42k a year.

Sorry to break it to you, but that income puts you into TJs “wealthiest in the country” category. no doubt he’ll be happy to explain to you why it is laughable that you consider yourself anything but filthy rich.

earning £42000+ puts you in the top 10% of earners and therefore amongst the wealthiest in the country

You seem to have missed this so let me repeat it:
No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t.
No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t.
No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t. No it doesn’t.

As pointed out at length earlier you have to clear 40k AFTER TAX to be in the top 10% of earners.
And if your 42k is the only household income then your household is BELOW the national average and only a bit above median.

If its your only household income then you do not have childcare costs unless you are a single parent

Phew. Lucky there are none of them then eh?
Or anyone whose partner can’t work / look after kids due to illness or disability.
Or anyone whose partner does voluntary work.

Personal circumstances vary. Which is why the sweeping absolutes that you are so fond of don’t hold up.

you are still back to comparing individuals with households

Yep. Cos that is what the new Child Benefit rules will do and that’s why it is unfair.

anyone any idea what % it is the case that one higher tax earner is worse off than two non

For same income (e.g. 50k versus 2x25k) the single income will always be worst off after tax.
Plus the double incomes will get more benefits.

God no not in the 40% tax band. I consider myself/wife as average possibly below average to be fair at a combined basic work income before tax of £40k-£42k a year.

£40-£42k a year is our joint/combined pre tax income.

With a family of 3 children. No company cars. Work 8 miles away and 15 miles away respectively (me on shiftwork), fuel/car running costs a fair bit of our budget. Plus all the other factors of raising a family, paying our way.

Yep bigbloke, so your household income is more than a house with a single 42k income – placing you well and truly on TJ’s rich list.

Renting flats in a cheaper areas and working shift work opposite to your partner – which saves the two main costs you complain of is simply rejected out of hand.

How on earth can you do that when you both work in professional services – a civil engineer and company director. I’m not sure my clients would appreciate me scheduling everything from 5pm-midnight so that it fits in.
TJ not everyone works shifts, its amazing you know there is actually a world outside your small edinburgh triangle. Most of the examples given on here are normal people living normal lives, earning respectable incomes but finding that the balance of costs vs income make certain elements hard to balance. Your dismissal of this as being due to their lifestyle choice shows you up as the narcissistic bufoon that I suspect you wish to be. Yoru life is not representative of the world, people have babies, people have normal 9-5 jobs that they are clinging onto by the skin of their teeth with no pensions and no salary uplift in years while the cost of living increases. Your arguments are, frankly, rude and disrepectful. I’ll stop there. We know that when we have kids there is no way both of us can work – we have no family here (a lifestyle choice – well no, they’re dead) and childcare will exceed the income so why bother. We won’t qualify for any state help as we are in a high tax bracket. We will struggle through. I might have sell the 911 though 🙄

Yep bigbloke, so your household income is more than a house with a single 42k income – placing you well and truly on TJ’s rich list

In that case please call me Sir Bigbloke in future when you address me…

One advantage for the self-employed is the ability to spread income across the tax-year, and tax-years and/or increase pension contributions or just leave it in the business for a rainy day.

And as we are both self-employed it does mean that whatever numbers the government comes up with I just work out where its best for us – consequently ensuring we both stay (just) below the ‘band’, minimise tax/NI and take whatever benefits we are eligible for.

Right so this might be useful to the discussion.

The Institute of Fiscal Studies “Where Do You Fit In” test:
http://www.ifs.org.uk/wheredoyoufitin/

Whack in your net income and see where you stand.

Funnily enough it turns out that Mrs 42k that I described earlier (£31048 take home, 3 young kids) is pretty close to the national median at 54%

So much for “top 10%” and “amongst the wealthiest in the country”. 🙄

Laughable. 😉