Child benefit cuts

Woohoo! I am entitled to child benefits … 😆

All I need now is to spread my seeds …

I met an ex Gurkha working as a doorman in Plymouth. He told me that this country had been wonderful to himand his family and that he couldn’t understand how others simply scrounged their way through life.

Well having skimmed read most of the posts I think the amount you takehome is relative to what generation you are from and whether you;ve been completed screwed over by ridiculous property prices.

If you earn £45k and are sitting in your nice detached house that tripled in value in the last decade then I expect you won’t notice.

If you earn £45k, had to live with parents for 3 **** years to buy a crappy 2 bed terrace with most of your income going on the mortgage you are not rich

For me and the missus this is another frustration as people who will most likely never claim benefit but also never likely to earn enough to be comfortable.

Just basing it on earnings is not the answer, benefits needed to be based on total accumulated wealth. We know a couple who don’;t work, as they have lots of inheritance but still claim benefits….

I pitty the next generation that are just coming through. They won’t even get pensions.

I could accept this if
…
The same rules were applied to those who choose not to work

They are. If you choose not to work and earn enough to pay higher rate tax you won’t get child benefit either.

Just basing it on earnings is not the answer, benefits needed to be based on total accumulated wealth.

How exactly would that work? How much money would it save relative to the cost of administration? Do you not think that people would find all sorts of ways to hide their wealth so as to make the whole thing a nightmare of regulation? More fundamentally, while there are doubtless some people with lots of savings claiming benefits, they are few and far between – it’s really not worth expending the resources to stop that sort of thing (though I’m dubious about the implication of your example – if they’re living off savings then they’d have income which would prevent them claiming benefits unless they’re cheating, but that’s a whole different issue).

Excactly how many times does it have to be pointed out that this is a financial measure not an ideological one? The proposed measure saves more net money than any other way of not paying it to higher income people whilst still paying it to those who need it. End of.

I believe you can’t claim unemployment benefit if you have savings over a certain amount.

Housing equity can easily be proven etc.

It is perfectly doable. Yes people will look to get round it, as there always is, no matter what the rules.

How about IT contractors paying themselves minimal salaries and keeping the majority of their earnings in thier company to draw down at a later date. I know alot of people who do this to minalise tax burden. Maybe not a huge % of the uk population, but I would imagine a sizable chunk of tax revenue.

Anyway won’t happen as like you said it would be far to much effort to do it, and you rightly point out cost more than it saves.

It’s still a shit situation though.

It’s still a shit situation though.

Why?

Seems bizarre. It will annoy lots of people while saving almost nothing.

How much does it save? About £1Bn, which is a miniscule amount.

It has bizarre effects: people with children on salaries between £48k and £55k are going to be asking for pay cuts. Families on the same joint income will be getting massively different payments.

Inept.

For me and the missus this is another frustration as people who will most likely never claim benefit but also never likely to earn enough to be comfortable.

If you won’t earn enough to be comfortable than you will be under the limit thus not be affected by the benefit changes.

One thing that this has bought to light is that families are using child benefit to supplement their lifestyle. There was talk on the news of families needing to move house…if you can’t afford it on your WAGE why should the rest of us fund your surrey house?

Also smiling at the irony of some torys getting a bit ‘trade union’ about it 🙂 It’s not fair on the middle class elite!

luked2 as it’s so little money can you lendgive me £1 billion?

One thing that this has bought to light is that families are using child benefit to supplement their lifestyle. There was talk on the news of families needing to move house…if you can’t afford it on your WAGE why should the rest of us fund your surrey house?

I suspect this is a small minority, or maybe a sample of 1??
The amount I receive (or my wife actually as it is paid to her not me)with two children would not make a “lifestyle” difference unless it was very marginal.
I suspect that the people in Surrey of which you speak are in dire straights if around £120 per month is keeping them from losing their houses!

luked2 as it’s so little money can you lendgive me £1 billion?

It is a fair point. We are talking big numbers here and £1bn is a trivial amount.
I would be interested in how many will lose the benefit (we will) and how many feel it is unfair (I dont)
Its a long overdue change and should have been done by a labour govt and not a tory one as its fair and redistributive.
I like having the extra money but hand on heart I dont need it and others do.
How that extra cash will be more “fairly” distributed is another matter and whether this was a fair change to make in light of other changes that could have been made to bring in revenue will be an interesting debate and its valid for those that have lost it to point to other areas such as tax evasion by the rich.

It is a cheap to administer, populist policy measure with some very strange “unfair” anomolies.

It will be interesting to see what other steps are taken to drive down the deficit and if the ultra-rich are asked to contribute a bit more to the economy.

How many people on here who are backing the decision would accept a 10% cut to their income, it doesn’t matter if you’re earning 20 or 200k – a 10% loss will still require a change of lifestyle.

Have I missed something on the total benefits cap?

Most of the reporting and political comments has been aimed at the high tax btacket cut, but it is the total cap that has caught my eye…

£26k cap to be equivalent to an average salary. This looks to be a mix of money saving and ideology – ie it must be beneficial to work…

BUT, presumably 26k of benefits is net of tax and NI, and therefore equivalent to a £34k+ salary?

Monthly take home on 26k salary is going to be about £1650 – I know this as mrs rkk01 is a teacher. Monthly “take home” on 26k benefits is £2160 – ie £500 A MONTH higher….

There is also something iniquitous with the way the higher tax bracket withdrawal is being presented.

Yesterday (IIRC) this was presented as aimed at “high earners”, ie them, not us, the priveliged, the wealthy, the comfortably off. I believe a figure of 5% was being touted (not sure if by journos or by George / Gideon) to emphasis the small and priveliged proportion this applies too.

BUT, over my working career the higher rate of tax has not been increased in line with pay rates. Each year an ever lower level of the working population are cuaght by higher rate tax.

Last night’s news was talking about the “top 5%”, but also talking about 1.2M families affected, with a further 6.2M families that pay the lower rate being unaffected. By my mathematics, that is more like 15% than 5%…? As ever, statistics being skewed (an abused).

How many people on here who are backing the decision would accept a 10% cut to their income, it doesn’t matter if you’re earning 20 or 200k – a 10% loss will still require a change of lifestyle.

Are you saying the cut is 10% of your income?
If you are losing benefit then you must be a higher rate tax payer?

If so how many children do you have?

By the way, earning £40k+ isn’t something that happens by luck or chance. Nor by education or privelage alone(a few GCSE’s were my formal eductaion).

Luck, chance, education and privilege play a pretty big part in it for a lot of people though. Look at many of the high earning careers – you end up needing degrees (a lot of advantages if you come from a privileged background, have parents who can afford to fund university), luck (being lucky enough to be clever enough to do them).

I had the luck to not find university particularly hard, luck that my hobby happened to be a quite lucrative area to work in (computer programming), support from parents who had both gone to university etc. I did a bit of work sometimes to get where I am, but mainly it is a whole lot of luck and just taking chances by working with stuff I wanted to play with, that happened to pay off financially.

If I’d been roughly the same person, but unlucky enough not to be good at playing with computers, I certainly wouldn’t have had the same earning potential.

Although having said all that, in the end I chose not to go for the money, changed what I did, dropped a whole big chunk of salary (like >20K pay drop initially), so I’m well under the high tax rate, and even then I don’t feel like we desparately need the child benefit.

Joe

top 5% of earners not top 5% of families.

For child benefit to be 10% of your earnings and you to be at risk of losing it you must have lots of children

On the face of it, although this is undoubtedly a somewhat crude, populist measure, I agree with the idea behind it, although my household is one that will lose out as a result, having only a single income in the higher tax bracket.

Something that seems curious to me though – I can appreciate that the proposed cut-off is the simplest to administer and should therefore be the most cost-effective (although with the plan being to recoup money paid through income tax this remains a theory at best!) however, with the Child Tax Credits infrastructure in place already, does the Treasury not already hold the information required to assess income on a household, rather than individual basis?

Someone made a good point earlier in this thread regarding the word ‘fair’ and the eagerness of politicians to use this word with impunity, as everyone has their own idea of how to quantify this.

I’d also suggest that, given the events of the last 15 years in the housing market, the notion of ‘wealthy’ is also too complex to be judged by gross income alone, whether its household or individual. At the same income levels, there have been real winners and losers over the last decade, dictated primarily by the property market, so that two families with similar income levels may be at rather different ends of the ‘comfort’ scale.

In addition to this, when we consider the cost of childcare and the effect on this that the availability of willing and able grandparents (for instance) can have, then variations in disposable income (which is at the heart of the debate here) can become considerable.

For most earners in the upper tax bracket, its probably true to say the universal child benefit is simply another source of income, but nobody likes having income taken away, do they?

How many people on here who are backing the decision would accept a 10% cut to their income

I have done exactly that twice in the past, most recently one year ago when I moved jobs and had to take a pay cut of around 10%.

I was at the dentist this morning and saw a guy with EIGHT children. ( :-O )

He’ll be gutted at this news – it’s about £500 a month to him.

Child Tax Credits infrastructure in place already, does the Treasury not already hold the information required to assess income on a household, rather than individual basis?

Problems with that –
1)The child tax credits have been plagued with problems, are expensive to administer, and a pain in terms of paperwork for people claiming them. There have been loads of pains with underpayments of tax being taken back, and overpayments taking a long time to get back from the government, and with problems where people don’t notify the government of salary changes quick enough.

2)Quite a few high income earners don’t qualify for child tax credits, so don’t have to claim in the current system, as well as this, quite a few people who might qualify, don’t bother claiming – there would be a massive extra administrative burden if you essentially forced everyone who had children to do the tax credit claim, plus an extra financial cost as people who don’t bother claiming tax credits all claim them, as they’d be forced to do the paperwork anyway.

3)They (the tories) have been going on about removing or simplifying tax credits for ages, so it would be stupid to hitch a new policy onto an old and (in their view) broken system that is inevitably going to get a major overhaul quite soon.

4)Anything where both parents are taken into account is quite possibly subject to fiddling and fraud about who is and isn’t taking parental responsibility for a child, who is living together etc.

I’d also suggest that, given the events of the last 15 years in the housing market, the notion of ‘wealthy’ is also too complex to be judged by gross income alone, whether its household or individual. At the same income levels, there have been real winners and losers over the last decade, dictated primarily by the property market, so that two families with similar income levels may be at rather different ends of the ‘comfort’ scale.

Exactly the point I was trying to make, but put much much better….!

Fair points joemarshall.

there would be a massive extra administrative burden if you essentially forced everyone who had children to do the tax credit claim

Just on this one – they have said that they’d expect people who’ll stop getting the benefit to stop claiming so that they don’t have to fill in any forms so for most, that will mean no overall change eg still no form filling

the “top 5%”, but also talking about 1.2M families affected, with a further 6.2M families that pay the lower rate being unaffected. By my mathematics, that is more like 15% than 5%…? As ever, statistics being skewed (an abused).

You are confusing families and earners. Poeple without children also earn money. Yes the top 5 % of earners are affected which affects 15 % of families [if your figure is correct]. Tory minister in Newsnight claimed the median wage of those affected was 77 k.

You never need to fill in a forma anyway – you just call them.

surfer – If so how many children do you have?

I am a higher rate tax payer (just), a single earner with 4 kids whose wife stays at home. I guess I’m one of the ones who is worst affected. I’d be better off trying to negotiate a 4 day week and send the misses back to work for a day a week.

I just think it should be based off overall household income and not just if one earns the over the threshold.

We can probably get by without the CB – but we don’t live in luxury and don’t go on foreign hols, buy designer clothes etc

less benefits for the better off – cap on benefits for the scroungers

what’s not to love?

I’m as right wing as they come on here, and sorry, quite simply, anyone on 44 k per year is comparatively well off, and does not need benefits to supplement their wage. If they cannot afford their children, then they should have thought about that a little earlier and not spent all that money on the new volvo!

No-one on nearly double the median wage needs to live on benefits, its just another example of the entitlement culture that has grown under successive governments.

I have a feeling that the only complaints are from those who’s self absorption has failed to give them a sense of perspective on life, and who’s interpretation of fairness is “I want what someone else is getting” rather than “do I actually need this money”

Hopefully a first significant step in reigning back the role of the state and making people take responsibility for themselves and their own choices, Bravo!

Tory minister in Newsnight claimed the median wage of those affected was 77 k.

I’d love to earn 77k!!!! I’m on my way there but it’ll be a while yet…..

Also, if I was earning 77k then why the hell would I need benefit?….. Greedy barstewards!

Ruddy – hell – if Zulu agree with the policy it must be wrong 😉

Hold on, and bear with me please. I’m not in the UK just now so I’m not following the news at the moment.

But, where does the 44k come from? As far as I know the rates for tax are:

Starting rate for savings 10% £0 – £2,440
Basic tax rate 20% £0 – 37,400
Higher tax rate 40% Over £37,400

So a higher rate tax payer is someone who earns over £37400.

Can someone fill me in on the missing details, thanks

You are confusing families and earners. Poeple without children also earn money. Yes the top 5 % of earners are affected which affects 15 % of families [if your figure is correct]. Tory minister in Newsnight claimed the median wage of those affected was 77 k.

Don’t disagree with this – and suspected that this was the difference. And it plays to my comment re elective use of the stats to spin the story… (as ever).

Thinking it through, you’d expect families to be over represented (ie the 15% of families / 5% of earners). Most / many of us earn low wages at the start of our working lives (ie pre-family). Having a family triggers other needs, such as larger more expensive accomodation, that have to be paid for etc – a very strong motivation to maintain or increase income. Also the age range of those supporting a family tends to fit with one of the most productive age ranges of people’s careers.

ETA – The median 70ish figure also feels about right – for those families where both parents work.

Zedsdead

taxable in come v total income

so to go into the tax band at £37400 you have to have a total income of £44 000ish ???

Can someone fill me in on the missing details, thanks

You haven’t added the tax free allowance. This is what takes it up to £44k.

Zedsdead – those figures are plus your *personal* allowance.

which for most people is £6475.

Cue discussion about getting rid of lumbersome child tax credits regime and instead changing your personal allowance (which could result in low earners getting a negative tax bill in every pay packet – eg, gross wage £120, deductions (income tax) minus £25 take home £145 )

Can I just check – are people still confused by the idea that this is anything other than a money saving measure? You do understand that any more complex means testing regime to catch more people wouldn’t save more money?

I’d be better off trying to negotiate a 4 day week

You make it sound like it would be difficult – you are aware that your employer would have to have a very good reason not to let you do that (currently sitting at home with the kids on my “day off”)?

sorry, quite simply, anyone on 44 k per year is comparatively well off,

Someone on 44k should be comparatively well off – but if they’ve bought a house in the last (say) 10 years the picture isn’t that simple – as has been posted above…

With the “average” UK house price at something like 166k (189k in 2007), that is still well over the oft quoted 3.5x multiplier for the tax threshold earner. And the “live somewhere cheaper” argument only goes so far – property is notoriously more expensive where the jobs are, and cheaper where the jobs aren’t…

I’m not arguing against the cut, just the apparent lack of fairness in the application of it. Maybe keep the universal principle and scrap CB altogether – then adjust income tax rates accordingly.

Stopping the “career benefit culture” at the bottom end needs to be better addressed.

As per my first post – the cap still equates to a mid 30s salary 🙄