Changes to child benefit -implementation

Auntiestablishment, thanks for the link.

I do wonder why the Parlimentary Child Benefit specialist didn't know about that though. Given a job title like that, you'd expect him to be a bit more clued up about it!

Am surprised neither MP nor Parliamentary specialist could find this link as it was v easy!

According to this HMRC link there will be an additional tax charge to balance out the child benefit - so you continue to claim but the higher earner has to pay more tax.

It says that to avoid the tax charge you could elect not to receive the child benefit - but you should continue to claim, in order to maintain your NI record. This is at A8 on the HMRC page.

Ophelia, I wrote to my MP a few weeks ago asking about the impact on state pensions.

MP's reply:

"I have spoken to the Parlimentary Child Benefit specialist in the House of Commons Library. He has informed me that he does not think that the changes will affect your claim to national insurance credits. However, as he cannot be entirely sure I have written to HMRC asking for a clarification and to George Osbourne, Chancellor of the Exchequer, expressing your concerns."

Kinda sounds like they've not really worked it all out yet

How are women who lose their child benefit going to keep their pension stamp? It is tied to child benefit for non-working mums, so if their husbands earn over £50k or they lose it altogether, how will they get their pension stamp?

Suggest looking at signing the current Gov e-petition 'fairness in Child benefit'
Can google it and sign on-line. If they get 100,000 signatures it has to be debated. It'll end up costing more I expect!

Thanks EW. So it's not so much the implementation of it, it;s the fact that it's paid to one person on the basis of how much other people earn.

It doesn't seem to be going that way though!

Iggly: there is a safety net for all in the existing system - indeed there always has been. the Bevanesque vision was about so much more than that though.

Stealth: for joint household benefits, you have to apple together so details of both at included. CB currently gives both NI credit and cash element to one person and no details of third parties are required. Turning it to a household- based payment would not deal with the NI credit issues, but would violate the principles of independent taxation. Of course, taxation has not always been individual, and there's no reason to think it must always be in future, but if it is to be abandoned, I would rather see it happen after proper consideration and debate.

Surely they must ahve processes in place to ensurethe declared family income is as declared

They should. But don't check every application - it's done on a sable basis iirc. I was the victim of fraud as someone had used my name, address and NI number to claim tax credits and my post was intercepted until one day a letter got through and I rang them up. I was because if they'd checked my NI number and tax paid they'd have spotted that I earned too much

Can I ask what I am sure is a stupid question?
The problem seems to be that this relies on the family / household income rather than being a universal benefit. So in the situation where the mother is not a higher rate tax payer but her OH is, she may not know or have been told.
How is that any different to tax credits, which also rely on the household income? Surely they must ahve processes in place to ensurethe declared family income is as declared?

Well I start from the view that NI sends out the wrong message so should be changed. Not being a tax expert, I couldn't possibly come up with a decent solution but I'm sure there is one (even it it is make it clear what NI is for).

There are many sections of society who cannot contribute hence my reasoning that there should be a safety net for all if needed, regardless if one is considered deserving or not.

Very few are contributions based now. I decry their abolition because I am a fervent supporter of the Bevanesque vision of the welfare state, rather than the slimmed down, utilitarian "safety net" approach that I think is very divisive.

I do not think it is wise to propose the abolition of a functioning part of the revenue and welfare system without having some idea of the logistics and practicalities (takes us back to the start of the thread, and the weaknesses in the current CB proposals that were so ill thought out).

I don't think benefits should be based on contributions - philosophically that doesn't sit right with me. I think the welfare state should act as a safety net (which it does do in some ways but not in others).

I also think NI creates the impression that you're paying for something specific, which you're not, hence getting rid. No idea of the logistics or practicalities though.

I am not proposing the abolition of NI; I think the distinction between earned and unearned income is useful. I even quite like the restriction of some benefits only to those who have made contributions (symbolic reasons as much as anything else). So my suggestion is to leave NI alone.

Well some of the historical reasons for NI don't apply as they did before. So why do we still need it?

So changing the PA would help adjust for getting rid of it but create winners an losers unfortunately. I'm not saying that's the answer but it's the only one I can think of right now. NI is payable on certain conditions so can those conditions be applied in a simpler form to PAs?

What would you suggest?

Actually it isn't: it's related to type of earning, and people pay NI on those income streams related to paid employment, and employers also pay.

PA are applied to all forms of income.

When you look at the multiplicity of types of pension, pensionable age, overlapping work and pension etc, it becomes as clear as mud, and the likelihood of unintended consequences is far higher them on "simple" changes like abolition of 10p tax rate or proposed changes to CB.

So I ask again, if you want to change PA, who will you be changing it for? What is a pensioner in these circumstances?

Surely that's an issue for NI already then?

How are you going to define a pensioner? I think that system, which looks the the person, rather than the type of income, is likely to introduce a number of anomalies, and be exceedingly complicated to administer, especially as working patterns are no fixed.

Yes I know. So if you merge NI and tax, you adjust the PA further to allow for that.

There is already a different personal allowance for pensioners that is gradually withdrawn depending on the level of income and is quite complex. The point that Edith is making is that pensioners afaik, don't pay NI.

You could have a different personal allowance if you're a pensioner thus reducing tax paid?

I don't think they should be combined, as that would make a massive tax hike for pensioners.

I do think NI and income tax should e combined as they all go into the same pot anyway.