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Will you be taking action to protect your child benefit?

(26 Posts)
NoComparison Mon 24-Sep-12 13:00:30

Frustratingly DH earns £43,000pa. I work 16 hours pw at close to minimum wage. Whilst it could be argued that we don't need the child benefit (and we don't, really) losing £135 per month will make a big difference to us. It also seems very unfair that other families with joint income of £85k will still get their benefit.

Apparently (R4 today) letters go out this week asking families with one parent on £42,475+ not to claim WEF from January. (Although I'm sure I heard it had increased to £50k and would be tapered?)

I've just heard, that the options are:

- Increase pension contributions to make taxable income less than £42,475
- Take childcare vouchers to reduce income to less than £42,475
- Pay money into an ISA

I understand the first two, but not sure about the ISA. Is it the income in the ISA that is tax free or can DH pay part of his income into an ISA, thereby reducing his income below the threshold?

I think we'll probably do the pension, by increasing his contributions by £600 pa we'll be better off by £135pm. What will others be doing, or are you happy that it's only fair not to claim this benefit once your income is over the threashold?

riksti Mon 24-Sep-12 13:15:12

Not sure why they were referring to the higher rate limit - child benefit will be withdrawn if taxable net income is £50,000+. I'm on a phone so can't link but if you google for 'child benefit HMRC' then you can get the HMRC summary on their website which should explain the basics.

riksti Mon 24-Sep-12 13:20:11

And yes, it will be withdrawn at a rate of 1% for every £100 the income exceeds the 50k limit. So not all of it is lost if the net income turns out to be £50,100

NoComparison Mon 24-Sep-12 13:34:10

Really? You see I knew I'd heard that, as we're so close to the original limit, it was big new to us when the limit was increased. I might have to email R4, as they were definitely talking about £42,400

The tapering is right and fair - we were in the mad position of possibly being worse off if DH got a pay rise confused

CogitoErgoSometimes Mon 24-Sep-12 13:39:08

As I go with the principle that those who earn the most should contibute the most I won't be hiding income anywhere. I could use the £80/month but other people need it more than me. Pay plenty into an ISA already and it has no impact whatsoever on my tax bill.

AnnoyingOrange Mon 24-Sep-12 13:45:20

Info from HMRC here. Tapering starts at £50 k as mentioned earlier on the thread

www.hmrc.gov.uk/budget2012/cb-income-tax.htm

I posted this the other day on a CB thread

NoComparison Mon 24-Sep-12 14:03:41

Cogito - if you put money in ISAs you're already hiding income wink

charlottehere Mon 24-Sep-12 14:04:57

Marking spot for later.

CogitoErgoSometimes Mon 24-Sep-12 14:25:00

I'm not hiding income from the tax-man in the slightest. What I put into the ISA has already had the tax paid on it

NoComparison Mon 24-Sep-12 14:31:56

The point of an ISA is to protect the income (or capital gain) on your savings/investment from the taxman Cogito. Perfectly legitimate, but it does have the effect of reducing your tax liability. Exactly the same as taking some income in childcare vouchers or putting it into a pension.

LadySybildeChocolate Mon 24-Sep-12 14:35:30

They are taking it away from you because the country's skint, and you're trying to find ways of keeping it? confused I'm sorry, but a lot of families have had a cut in their benefits, why should all of those above £43k a year not lose anything as well?

NoComparison Mon 24-Sep-12 14:49:29

LadySibile - that's what I was asking and it turns out it's actually £50k anyway. My but is with the way that some families will earn close to £100k and keep CB while others on much less will lose it.

Doing the work I do (and the income I have) enables me to be part of the big society wink and do loads of voluntary work. I know I am fully playing my part and by my free labour replacing may things that used to /should be paid for by taxes. I'm not sure that families with 2 x £50k income are smile

NoComparison Mon 24-Sep-12 14:50:36

And!! Can you honestly say you have never used an ISA/pension scheme/cash payment to avoid paying tax you could have paid?

NoComparison Mon 24-Sep-12 14:50:47

Or duty free?

MummytoKatie Mon 24-Sep-12 14:53:20

It was originally 43k-ish but it has now moved to £50k with tapering brought in for those that earn between £50k and £60k. So if you earn £51k you lose 10% of your cb, £52k is 20% etc.

Wrt your original question I don't think we are going to do anything different although we have both been meaning to get around to upping our pension contributions for ages so it may remind us to get on with it. Although knowing us we still won't get around to it!

Bintang Mon 24-Sep-12 14:57:55

sorry, what is WEF?

tethersend Mon 24-Sep-12 15:02:14

Can anyone explain where the money saved will go?

CogitoErgoSometimes Mon 24-Sep-12 16:16:25

"Exactly the same as taking some income in childcare vouchers or putting it into a pension. "

It's nothing like the same. I'm taking taxed money, putting it away and saving some tax on the interest. You're taking untaxed money, putting it away in a pension and then declaring a lower gross income so that you can get a few more quid out of the rest of us in benefits. It may be a legitimate dodge but I don't think it's very admirable tbh.

DiddyMary Mon 24-Sep-12 18:48:36

"Can anyone explain where the money saved will go? "
Reducing the amount of money the government has to borrow.

ilovetermtime Mon 24-Sep-12 18:55:34

I won't be doing anything as I don't believe I should have been entitled to child benefit in the first place. Benefits should be the last resort, for people who really need them, not for people who are already earning a decent wage.

It's the only thing that I agree with the government on smile

They should sort out the winter fuel payments for pensioners next, it's outrageous that people like my parents and their friends should be getting handouts from the government when in reality they're rolling in cash.

EldonAve Mon 24-Sep-12 19:00:21

I will probably aim to keep our income under the threshold so we can keep claiming

I think it's a really poorly thought out policy and totally undermines the principle of individual taxation

shineygoldpenny Mon 24-Sep-12 19:05:33

Is what R4 was trying to say that the Government are going to send out letters to all households with a single income over £43k and ask them to stop claiming CB, even though they are still entitled to claim it until they reach the £50k limit?

If so, I suppose it's a good idea, as there might be quite a few who would give it up, but I think it's a bit of a cheek and I hope the letters will make it clear that it's not compulsory.

AgentProvocateur Mon 24-Sep-12 19:16:17

Actually, I would give it up. It's nice, I enjoy getting it, but I don't need it, and I don't believe anyone else on almost 50k needs it either. I agree with the poster upthread who said that benefits should be a last resort, and only for people who really need them.

EldonAve Mon 24-Sep-12 19:35:38

Surely it's just a step along the way to deleting all the different benefits & replacing them with the single universal credit

scarlettsmummy2 Mon 24-Sep-12 19:45:23

Well I earn a good wage but don't feel guilty about claiming it. It all goes on children's expenses and the cost of living is going up all the time. We certainly don't live an extravagant lifestyle and it really makes a difference for us.

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