Changes to child benefit -implementation

HRT and the concept of different tax rates kicking in at different thresholds is already a disincentive to work hard and get promoted, even if you don't have children

I disagree!

Yep, I too would love a flat rate system coupled with a high tax free threshold like £15k.

And to just merge NI into income tax so there's no sleight of hand by saying "We will not raise income tax" then push up NI instead.

But imagine the outcry when people can easily see how much tax they are paying!

HRT and the concept of different tax rates kicking in at different thresholds is already a disincentive to work hard and get promoted, even if you don't have children. A person earning £50,000 pays £14,391 in tax and NI (29% lost in deductions) A person earning £25,000 pays £5,637 in tax and NI (23% lost in deductions) I've long supported the idea of a flat rate income tax as I think it would be fairer and would remove the disincentives.

Should add that it's not I think people on 26K benefits are outrageously loaded; rather that I think someone earning 42K to support a family is not loaded either, and can no more bear the loss of that CB than the family on benefits.

It is silly though that they are currently planning to limit the universal benefit to 26K = 35K gross; those with a HRT who are deemed "rich" will only be getting 7K more (at present); once you take off work-related travel and childcare costs, prescription costs, free school meals etc, which can easily come to &K a year or more, I doubt the "rich" family with an HRT are actually any better off than the family who are so "poor" they are on "only" 26K net.

Where is the incentive to work, let alone work hard and get promoted to a HRT job if you are then to lose your CB and possibly be worse off than on benefits?

It's a bit of a sneaky move really, given the "average wage" calculations for the benefits cap, most "average" people will be HRT payers and lose CB, people on benefits will effectively lose CB to the UC. Methinks they are trying to ditch it quietly.

threshold is being reduced quite alot over the next few years isnt it? i thought it was being reduced to 35k p/a

I read the links about HRT payers, and we might actually be alright after childcare vouchers and pension (watch how he now gets a raise that puts us just above again).
I was a bit that they are reducing the threshold in time for the proposed changes, so people on £42k lose out even though they weren't HRT payers this year.

Phew. Remnants of my old life creeping in....

The whole thing is an ill thought out disaster. If they back down it will be more fuel for the 'keeping it sweet for the posho' papers, and if they keep it without massive changes it will be an unfair change.

Personally, I think it hadn't occurred to George Osborne to do the math. I think he assumed all HRT had a little wifey tucked away who could easily spare the latte fund. I also think the Tories are so far from reality that they assume anyone who is a HRT is actually a millionaire. When you are stinking rich its hard to imagine what money actually buyts when budgeting comes into it.

I see this catching out people like my dh who has to do a SATR; and those who are cohabiting/ self employed/ PAYE will not be troubled too much. For me its a loss I will notice - I work p/t and travel for work; the CH Ben is left as travel costs and childcare pretty much eat up all my earned income.

I GET that we all need to cut down; I don't get why a couple (and not the mythical 45k each ones) on say 30k each will keep it and we won't. I have childcare costs too!

Yes grumpy, but appreciated nonetheless Let's just say there has been a LOT to get our heads around!

ali - sucking eggs, right?
www.ir35calc.co.uk/dividends_calculation_taxes.aspx

January 2012 allegedly. But I fail to see how it will happen so quickly.

Blu no, April 2013.

Is this cut due to be implemented this year? If it goes through?

Hunty I think that is why the idea was that you would still claim, but the it would be clawed back via tax return - because then the HRP is protected.

I need to check, because although I will be earning it will be dividend income amd therefore not subject to NI so I won't get it that way.
I am very happy to go without the CB because I can't honestly say that we need it, but I do want to protect my right to a state pension.

This was such an ill-conceived policy, I think they will have to U-turn.

It's the HRP for NI credits that bugs me. How can the Government NOT have thought about something like that?

I think this is just an expensive mistake by the Government, that WASN'T properly thought out before being announced, as they gave no thought to the cut-off point, whereby a single earner household only has to earn £42k to lose ChB, yet a dual-income household can earn £80k before losing it. AND they gave no thought to the HRP.

Kanga I completely agree with your point about tax allowances, you should either be taxed as a single entity or not.

We would lose it next year based on DH's income, but actually by then we anticipate that both of us will be HRT so the point will become moot.

bread - DH and I have just set up our own business and will be paying corporation tax and tax on dividends rather than via PAYE, so a similar problem. I think we will just stop claiming to avoid any potential issues, but we will miss it if we have a quiet patch.

How do you find out exactly what the gross pay threshold is for HRT?
DH is thereabouts, we might just scrape back under the threshold (if we're over it) by increasing childcare vouchers.
We will be one of the "losing" households under current plans, as I earn a bit below the basic tax threshold

And I wonder what they'd do if you were married but not currently cohabiting?

I think they desperately need a ladder to climb down.

The obvious one would be to announce that the underlying administrative arrangements for the proposed change would not be ready in time, and say that the issue will be revisited in due course?

There is a synergy with the (going off at half cock) dynamic tax database. Perhaps that all needs to be resolved and demonstrably working properly before additional changes are made.

saary=salary, or earnings really, as not just one salary if self-employed.

What about the self employed who won't know their saary till the tax return is due the following Jan and they've worked it out - will they claim CB and have to return it if it turns out one is an HRT?

Sounds a complete mess.