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To think benefit caps should relate to FAMILY income?

(34 Posts)
TallyLo Tue 30-Oct-12 11:40:55

I decided to work out the difference in our family income that has changed by changing job roles in recent years.

A few years ago DH and I were both teachers, earning about 31K each. Now with promotion DH earns 62k and I plan look after the children after this baby as childcare costs in London will exceed my wages. Our household income therefore is the same, simply one person earns what two used to earn.

I was surprised to calculate how big the difference in take home is with both scenarios:

1. (one earner of 62k)
Earnings after tax: 46k (no higher tax bracket)
Childcare voucher savings: (2x930) 1860
Child benefit: 1700

Total: 49560

2. (two earner of 31k)
Earnings after tax: 42k
Childcare vocher savings: £600
Child benefit: 0

Total: 42600

So that's a huge SEVEN GRAND difference in budget, on the same household salary.

I'm not arguing that we should get more from the state, we're obviously in the bracket of a good household income and it's right we're not entitled to benefits in the current climate. I do however think benefits need to be brought into line based on family income. With the proposals a household with two incomes of 49k could be taking home nearly 40k more than us and receive more vouchers/ child benefit. I can't think of the reason why family income is not used to calculate entitlement.

If anyone is interested a nusery place in London i around 1100 per month, so 2 is £2200, so requiring a salary of £36,000 to cover fees (and excluding costs of commuting, similar to the savings of childcare vouchers so it balances out)

*this is my calculation, I'm no expert so someone may find errors!

Chrysanthemum5 Tue 30-Oct-12 11:52:11

I think you've put the wrong headings on your calculations? I'm assuming the first set is supposed to be the household with two earners? So they have £7,000 more?

I think you need to consider that the household with two earners will need significant amounts of childcare which will cost more than £7000?

TallyLo Tue 30-Oct-12 12:06:30

Yep, wrong headings.

I thought about the childcare costs of 2 workers after I posted. Would it be fairer to subsidise this through vouchers? Not all familys have the childcare costs exceeding 7k for various reasons (among my friend grandparents doing large amounts, working around each other regarding times of work etc)

TallyLo Tue 30-Oct-12 12:12:18

I suppose scenario 3 could be:

3.(2 x 49k)
after tax : £70k
child benefit: 1700
vouchers:1220

total: 71,1920

receiving an additional 2300 in benefits on a tax home pay of about 28k more than the single earner of 62k

niceguy2 Tue 30-Oct-12 12:18:20

Yep, the entire tax system is seriously flawed and the upcoming child benefit rules take an already unfair system and makes it both stupid and unfair.

Unfortunately I can't see any realistic chance of making it fairer. We all saw what happened with Labour when they played with the 10p tax and the outcry from when the Tories cut the higher rate to 45p from the political booby trap of 50p.

TallyLo Tue 30-Oct-12 12:21:35

oh well!

It's amazing how it's changed for us as a family. For dsd and dss we earned the first amounts roughly, and MIL did childcare. Now for ds and dd it feels like the world has changed (including the bloody visa rules that mean willing MIL can no longer help with childcare but that's another thread...)

WelshMaenad Tue 30-Oct-12 12:28:32

But presumably with you at home you are spending less on commuting/work wardrobe etc? I was amazed how much I saved on little things when I gave up work.

I'm sure I remember soneone telling me that in Canada, married couple can use each itger's tsx free earnings allowance, so if one was a sahp and the other worked, they could earn twice as much as a single person before paying tax. I'd love that to happen over here!

Ithinkitsjustme Tue 30-Oct-12 12:30:51

YANBU to wish they would use a household income over an individual one, but YABU to post with the wrong headings and completely confuse me, grin!

ReallyTired Tue 30-Oct-12 12:39:40

The whole child benefits thing is a total fiasco. Families are being unfairly penalised. I feel the governant should raise the percentage paid by higher income people. It is wrong that the childless who earn well have not taken their share of the cuts.

The tories hate families. Frankly I don't want to see families where both parents choose to work being so severely penalised. It is hard work having under fives, whether you decide to look after them yourselves or work to pay for childcare.

We have kept all our child benefit and I am relieved as I am not working at the moment. There is no easy way for us to increase our family's income. If I went to work then any money would be swallowed up by childcare and diseal. It is no brainer for me to work outside the home. The working couple may not have that much more money once they have paid for additional costs to allow them to work.

CogitoEerilySpooky Tue 30-Oct-12 12:43:57

YABU .... it's been decades since married couples were taxed as a unit and wives classed as an asset belonging to a husband. Everyone is quite rightly now taxed independently, gets the same personal allowance and then it's a level playing field for earnings after that point. The tiered thresholds for taxation make a big difference to take-home.

Unlike tax, which is based on individuals, benefits are largely linked to household income. CB is an anomaly and I fully expect it'll be phased out and any support for children rowed in with the new Universal Credit.

janey68 Tue 30-Oct-12 14:53:52

I agree totally that people should be taxed as individuals, not as a unit.

Also, you're not comparing like with like. You're trying to make a comparison between one job, and two jobs. A family with an income of £62k with just one person working is in a totally different situation to one which brings in £62k through two people working. A family with both parents working are likely to have childcare, extra commuting costs etc.

Also - and I think this is a really significant point - the family with one earner have the capacity to increase their earning overall, while a family with two people working don't.

Looking at it simplistically (and I know this is making it black and white for the sake of argument, but it helps clarify what I mean) family number 1 are making £62k through 37 hours work, whereas family number 2 are putting in 74 hours work to bring home the same amount. And yes I know many jobs are more hours than that, but the principle is the same.

The govt is certainly unashamedly rewarding families where both parents are in work, but that makes economic sense - two people paying tax, paying into pensions etc.

I understand why some people feel aggrieved about the fact that a couple earning, say £35k each will still get child benefit when a couple on one HR tax paying income won't, but I personally don't think it's unfair. I think families where both parents work generally have it a lot harder with the financial hit of childcare etc, and I think it's right that they are viewed as individuals rather than lumped into one unit.

KellyElly Tue 30-Oct-12 15:06:06

I'm sure I remember soneone telling me that in Canada, married couple can use each itger's tsx free earnings allowance, so if one was a sahp and the other worked, they could earn twice as much as a single person before paying tax. I'd love that to happen over here! that wouldn't really be fair on the lone parents or the unmarried!!!

ReallyTired Tue 30-Oct-12 16:13:34

"I'm sure I remember soneone telling me that in Canada, married couple can use each itger's tsx free earnings allowance, so if one was a sahp and the other worked, they could earn twice as much as a single person before paying tax. I'd love that to happen over here! that wouldn't really be fair on the lone parents or the unmarried!!! "

I imagine there is a school of thought that diliberately want to penalise those who have sex outside marriage or divorce.

I feel that all families deserve a little extra in the form of an allowance for children in the tax system. What stinks is that childless people are not being asked to take a major hit in their income.

QueenStromba Tue 30-Oct-12 17:11:48

Childless people also cost the government less ReallyTired.

ReallyTired Tue 30-Oct-12 17:53:19

"Childless people also cost the government less ReallyTired. "

We take money out of the tax pot when we need it. I was once childless and in my twenties.

Elderly people cost the state far more than young families. We don't tax the elderly more heavily.

Childless people have usually been to school and its reasonable to expect them pay towards someone else's schooling. The tax payer would have paid for costs when they were born. It is reasonable to expect babies to pay the costs back when they are adults whether they choose to have children or not.

QueenStromba Tue 30-Oct-12 18:08:38

So the British government should be sending a portion of my taxes to Ireland to pay back the cost of my school education? That's the only way the Irish government will be seeing a penny of the money.

ReallyTired Tue 30-Oct-12 18:22:50

"So the British government should be sending a portion of my taxes to Ireland to pay back the cost of my school education?"

Ireland has had the biggest bail out in history. I imagine the UK governant along with many others have sent more than enough money to pay for your education. It is the mess with the stupid EURO that has caused the financial mess we are in.

www.bbc.co.uk/news/business-11860879

Ireland has had an 85 Bn bail out from various countries. Thats ample to pay for your education.

AThingInYourLife Tue 30-Oct-12 18:36:40

LOL grin

Touché, Really

ChunkyPickle Tue 30-Oct-12 18:37:16

In Canada you don't have to be married to share the allowance. As an unmarried couple DP and I had all the same rights and responsibilities as a married couple.

At the time, I used his SAHP tax allowance, and the extra 10k tax free was very useful.

In this country I'm staying at home, and I'm not allowed to share my tax allowance so that just goes to waste.

On a similar point - all our children have a personal allowance too - If families could share their children's tax allowance that would certainly ease the load.

ShellyBoobs Tue 30-Oct-12 18:58:59

What stinks is that childless people are not being asked to take a major hit in their income.

Are you having a laugh?

A childless person on a decent income is already MASSIVELY subsidising your choice to have a family.

According to online calculators, in my area someone earning £28k with 2 children using some childcare (costing £150 per week) is entitled to £200 per week in tax credits, child benefits and a small amount of housing benefit.

Person on £28k with no DCs net income = £21,572
Person on £28k witn 2 DCs net income = £31,972

That's over £10,000 per year more income to help with the cost of just 2 children!

Exactly how much of a 'major hit' do you want someone else to take to help subsidise your choice of having children?

<fucked off on behalf of people like my brother who's single and childless>

ReallyTired Tue 30-Oct-12 19:29:01

ShellyBoobs, I have no idea where you get your figures from. Someone on 28K does not get £200 a week in child tax credits. That is utter bollocks many families who earn 26K get no child tax credits.

https://www.gov.uk/child-tax-credit/eligibility

Our family gets nothing but child benefit. I think it would help parents if they could use the children's tax allowance.

"Exactly how much of a 'major hit' do you want someone else to take to help subsidise your choice of having children?"

These cuts are have been made because the coffers are empty.The cost of bailing out the banks/ Ireland should not rest solely on families. Child benefit has existed for years. If you grew up in the UK then your parents would have claimed child benefit to pay for your upbring.

No one is asking you to subsidise other people's choices. I am suggesting that childless couples should pay back the costs that the state spent on them as children.

When you are old you will need somone to change your incontinence pads and pay for your pension.

IneedAgoldenNickname Tue 30-Oct-12 19:33:52

£200 per week in tax credits? I bloody wish! I might be able to afford to put my heating on if I got that much!

ShellyBoobs Tue 30-Oct-12 22:11:35

I was using EntitledTo. I also worded it badly, I was meaning £200 including all in work benefits. I imagine EntitledTo is probably wrong...

OutragedAtThePriceOfFreddos Tue 30-Oct-12 23:30:49

ReallyTired, I cannot see any sense in your point of view at all.

You are talking as if childless people don't pay any tax. They do. They pay as much tax as a childless person on exactly the same wage who has chosen to have children, except they take less back out.

Childless people have usually been to school and its reasonable to expect them pay towards someone else's schooling. The tax payer would have paid for costs when they were born. It is reasonable to expect babies to pay the costs back when they are adults whether they choose to have children or not.

Yes, it is reasonable to expect babies to pay the costs back when they are adults whether they choose to have children or not. So how are those people who have chosen to have children paying back what they cost when they were babies if they stay at home with their children, or work part time to be with their children?

Your point works both ways, but you only want to see the view that suits one side of it.

ilovesooty Wed 31-Oct-12 00:46:42

ReallyTired, I cannot see any sense in your point of view at all. You are talking as if childless people don't pay any tax. They do. They pay as much tax as a childless person on exactly the same wage who has chosen to have children, except they take less back out

Exactly. Why should they take a "major hit" when they don't get payments to start with?

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