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Wondering how much the Child Benefit cut will effect people & if its fair??

(18 Posts)
MrAnchovy Sat 13-Oct-12 17:01:01

According to the initial impact assesment, 7.8m families currently get child benefit and about 1.2m people of those will be affected by the claw back leaving 85% of CB recipients unaffected.

CogitoErgoSometimes Sat 13-Oct-12 15:53:48

MrAnchovy... your Christmas pudding example is fun but obviously wide of the mark. Whatever sector of society you choose, whether it's families with children or OAPs, I don't think anything like 80% of them are impoverished.

MrAnchovy Sat 13-Oct-12 14:54:56

"Having said that, this new scheme is going to be really difficult to administer, especially with the high number of unmarried couple households we have in the UK."

HMRC will be writing to every HR taxpayer that has the same address as a CB claimant so marital status doesn't come into it.

LadyLapsang Sat 13-Oct-12 14:10:46

To some extent it's unfair but I agree with posters who say that a couple who earn 55,000 between then usually have far more outgoings than a couple family with one parent that does not work outside the home. Having said that, this new scheme is going to be really difficult to administer, especially with the high number of unmarried couple households we have in the UK. The only good thing I can see about it is that overpayments will come from the higher rate taxpayer, rather than the benefit claimant unlike overpayments of child tax credit where a no / low earning partner (usually the female) who did not know their partner had had a pay increase would find they had to pay money back.

MrAnchovy Sat 13-Oct-12 10:31:00

The alternative being?

The alternative being the introduction of family-based means tests for everyone receiving child benefit. This would have cost far more in administration than would have been saved in child benefit.

What they have done is used the only existing mechanism through which the better-off declare their income - the individual Self Assessment tax return. This enables the main objective to be achieved with little extra administration cost, but does have the unavoidable side effect that families with one earner feel that they are treated less favourably than families with two earners.

One of the key advantages of universal benefits is that they are very cheap to administer so for relatively small benefits, like child benefit and particularly winter fuel allowance, they are the best way to ensure that the maximum amount of benefit goes to those who need it most. Consider this: the government decides it is going to spend £100m on a new benefit - Christmas pudding benefit say. This is targeted at the 80% of people who can't afford a decent Christmas pud. They can either give £5 to each of the 20m households in the UK, or get every household to fill in a form to show how much money they have available for their Christmas dinner, costing perhaps £3 per household to administer. This only leaves £40m to go to the deserving 16m households so they get £2.50 each. Which is better - everyone gets £5, even the relatively better off, or only the 'deserving' - and those who cheat - get £2.50?

CogitoErgoSometimes Fri 12-Oct-12 21:47:50

Personally, I think they would have been better scrapping it all together and rowing it in with the CTC and I think that's what will happen eventually. Your neighbours may have retained their £20/week but presumably they pay for childcare because they're both working whereas that's a cost you don't have. Swings and roundabouts.

£55k is about double the national average wage so you are well off. hmm

janey68 Fri 12-Oct-12 19:59:04

It depends how you look at it, whether you think it's unfair.
Comparing overall household income isn't comparing like with like if you have one household with one adult not working, and the other with both working. The ops neighbours, on a higher overall income, probably have childcare costs, two sets of commuting costs etc. And at least in the ops household, if they need extra money, she could work, whereas the neighbours have no more capacity to work if both parents work already.

I can see why you say what you do op, but it is equally logical to look at it from the point of view of whether the household contains a HR Tax payer

emma16 Fri 12-Oct-12 19:51:01

The alternative being?
I agree with what you've said but surely if they're going to cut it off at £50k it should be on household income, not one persons income, otherwise you have the situation ive already mentioned & that is just unfair to an awful lot of people. Scrap it altogether on over £50k, one person or joint!

Rockchick1984 Fri 12-Oct-12 19:41:33

I agree it should be based on household income, however I'd have to say it seems ridiculous to me that people earning these sorts of figures were entitled to any sort of benefit anyway hmm so I do think it should be scrapped for high earners.

Regarding it still being paid, and claimed back, this is to ensure SAHM's aren't losing out on their NI contributions for state pension. Personally I can't think of a better way to do this, it's not ideal admittedly but surely it's better than the alternative?

Tryingtobenice Fri 12-Oct-12 19:18:53

It's unfair, yep. Another badly executed strategy. It should be cut for any household income over £50k.

In the grand scheme this is actually one of their less crap cuts in my opinion.
If they could only stop the winter fuel payment going to high income pensioners as well, it might start to feel like they aren't just clobbering those who are already struggling.

And i mean actually struggling, not the squeezed middle who might have to give up sky.....

emma16 Fri 12-Oct-12 19:17:20

And if im correct in my information, they're not going to stop the payments as such, they will continue to pay out the payments & then send you a tax bill to pay it back the following year??!!
How dangerous is that system? How many people are going to fall into the trap of thinking 'oh ill just use a bit of that money this month as things are tight', before they know it they get to the next tax year, get a bill on their doorstep demanding all that the governments paid to them, to be paid back & guess what, they haven't got it. There will be families that will get into that mess & how many people have the ability to transfer that monthly money into a seperate account so when the bill comes in the following year, its there to send back? I really really dont think they've thought this through whatsoever.....

emma16 Fri 12-Oct-12 19:10:21

Thanks for that Eldon, i was aware its phased out altogether at £60k but it might aswell be gone at the stage we're at. Some people will class £55k as a high earner & to alot of people it is, even to me who's come from humble background it is, but it really isn't as big as people think.
We just think that its totally unfair how they've set about taking it off people..just based on one person's earnings, why not household income? Surely this is achievable via CB info they have on file inc Working/Tax Credits.
The fact two people could earn £49k a year each giving a household income of £98k a year, compared to one person earning £55k & losing practically all of it, is completely unfair & not thought out properly??

EldonAve Fri 12-Oct-12 18:41:02
EldonAve Fri 12-Oct-12 18:40:48

]]http://www.hmrc.gov.uk/budget2012/cb-income-tax.htm]]
you start losing some at £50K, it goes altogether at £60K

EldonAve Fri 12-Oct-12 18:38:44

yes it's unfair but it's just a slippery slope towards deleting it althogether and lumping it with universal credit

Herbsmum Fri 12-Oct-12 18:37:34

Haven't they changed the minimum earning amount? Have a look at the website.
I thought it was changed to the really high earners?

lisad123 Fri 12-Oct-12 18:36:44

I think it's terrible that the government can't see how stupid this is!

emma16 Fri 12-Oct-12 18:35:21

I'm all for helping to sort the country out, although we've never claimed any benefits, ran no debts up that we couldnt afford to pay back, that helped to get us all in this mess in the first place...but i find this incredibly unfair that because my husbands earns £55k a year we lose the CB, but a couple who live next door to us have a joint income of £72k, are going to keep theirs!
I know we're lucky to have my partners income at what it is but he's worked damn hard for a lot of years to achieve this for us all & we do get hammered in tax, but this is not the point from our side...its the way they are setting this system up that we believe is not fair, i.e my point above, and wondered if anyone else is in the same boat and/or what they think about the way they are cutting the benefit off? smile)

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