Child benefit changes - what do you think?

[KateMumsnet]

Next week, the Inland Revenue will write to 1.2m families about upcoming changes to child benefit eligibility. The changes mean that from next January, single-income families earning more than £50,000 per year will no longer be eligible for the full amount (currently worth £1,055 for the first child) - and those earning over £60K will no longer receive it at all.

The changes are controversial. Dual-income families who both earn just below the 50K cut-off - who have, in other words, a family-income of just under £100K per year - will continue to receive the full amount, leading to criticism that the changes penalise both stay-at-home mothers and single parents. Accountants are warning that new partners of divorced parents could also lose out. And the entire process is so complicated - with families forced to fill out complex self-assessment forms for the first time - that the Inland Revenue has reportedly postponed sending out the letters because they can't find a form of words that families will be able to understand.

What do you think? Will you be affected by the changes, and what will it mean for your family? Are stay-at-home mothers being unfairly targeted - or is staying at home a luxury which shouldn't be subsidised by the taxpayer? Should child benefit be universal - or should it be available only to families who are really struggling? Let us know what you think here on the thread, and don't forget to post your URLs if you blog on this subject - we'll be tweeting them over the next few days.

Tilder, I had a friend who was in that situation. Her husband and father of her three children was a higher rate tax payer who paid all bills and rent( they lived in a council house so rent about £80 a week). However she had to pay for school trips, kids clothes, furniture and baby equipment out of her CB - sometimes he would give her a little money twords these items if she was really struggling. Thankfully she is no longer with him.
I hope she was in the minority.

Indeed. I am old enough to remember child benefit coming in and in those days it was the first benefit paid direct to the mother for exactly those situations - where woman stupid enough to give up full time work and rely on male earnings (no woman ever should of course) and whose husband was not giving her any money.

To be fair Xenia, it was much harder for middle class mothers to work then. We can't all be trailblazers.

These days it's far easier. I'm of the opinion that taking any more than a couple of years out of the workplace is nuts ill-advised.

Well is it no easier for men to work than women unless women are stupid enough to accept sexist sets up at home. Childcare costs are as much a male as a female issue. Surely every mumsnetter is not on peanuts whilst married to someone who earns 2 or 3 x what she does in 2012.

The interesting issue is separate taxation. In theory it matters not what your spouse earns as women are no longer owned by men and are separately tax. That was a massive victory for women in its day - i remember it well and we ar lucky it is the law. This new change interferes with that. It means that you need to know what your other half earns and the money yuou receive in CB depends on what your partner earns. That issue does not affect me as I am a single full time working mother of 5 who loses 100% of her child benefit and yes I can afford it although I have never felt I had enough to save it over the years and I do have nearly £1m of divorce debt from what I paid to their father on the divorce. However I can certainly afford not to have it. On the other hand it means I do feel like the only thing the state ever particularly gave me as recognition of the now 28 years of almost constant day after day child bringing up I have done is being removed. I have never even used state schooling. I have been to the GP once in the last 6 years (as I don't eat junk and am not fat).

totally unfair - i've been a SAHM for pre school children because of certain circumstances, and now studying to return to work full time - but at a much reduced salary compared pre children. DH is just over 50k (JUST over), so we will certainly lose out.
David Cameron and his bunch of Tory cronies are such as bunch of tossers - they have NO idea. Crowing about the success of the economy while making cut backs - but look at us - we're all moving back into work into PART TIME jobs!

This really infuriates me. We're expecting our first child in December. My DH earns over the threshold, for which he works ridiculous hard, puts n long hours and endures considerable stress. On top of this, he has a two hour commute each way. He does this because it's important for him to provide as well as he can. I, meanwhile, am a funded PhD student, so earn relatively little. Our friends, meanwhile, who work shorter hours doing less stressful jobs that DH and who receive good holidays have a very similar combined income to us, but earn less individually than DH. Consequently, they'll get the full whammy and be supported to have their better lifestyle. Because of their position, they're also both entitled to lower rate nursery vouches so save a fortune on child care. I'm not eligible because I get a non-taxable bursary, and DH can only buy at the higher tax rate allowance.

Why should our friends be supported to cruise through life when we are being punished for working hard and missing out on other things as a result? Please don't think I resent my friends, it's the system I'm angry with.

Xenia, The fact is that women are more likely to earn less than their husband for a number of reasons. In my case, when I left university, I was earning then in 1995 a reasonable graduate salary. Over the years, this did increase obviously. However, when my first child was born, I wanted to work part time as I wanted to spend time with my baby. That is surely not unreasonable for a new mother. I went back to work when dd was 6 months old. I worked three days a week. Child care was then (2004) £500 a week. My salary pro-rata was about £1000 after tax. By the time I'd paid the childcare, paid to run a second car, bought clothes for work, etc, a large chunk of my salary was wiped out. By the time dd2 came along, it would have actually cost me more than I was earning to go back to work. We made the choice at this point for me to be a stay at home mum. My husband is now earning more than I could, as I have been out of the work place for a few years now and technologies have changed. My skills are outdated. I would need to retrain. It's great if women can remain in high earning posts when their children are small, but it's often not the reality for a lot of us.

*3bunnies" sorry I seem to be getting on my soap box about this and I don't mean to be :-). The difference may be £8,000 a year between those 2 households you describe but the whole point of my contention is that if 2 parents are working, they have childcare costs, which will eat up more than that £8k difference you talk about - wherever you are in the country. So a straight comparison between 1 partner earning £60k (with effectively "free" childcare as the other partner is a SAHP) against 2 x partners earning £30k each (and paying £13k a year in our case) is not fair.

Childcare costs need to be taken into account in my view if you're assessing income as a household.

Like most others I feel that this should be calculated by household rather than on an individuals income.

My DH works offshore, and as a result, his income is good but fluctuates wildly month to month depending on whether he's been at home or away. We never know how he will earn in a given year until it's over it might be 45k, 50k or if he's never home 60k. How will this work in practice. Will the government give us CB some months and not others dependent on that months earnings, or give it to us every month and then claim any overspend back from us. I do not know, but it sounds very complicated.

I feel a move away from the automated system may better identify who actually needs their child benefit. if you don't make an effort to collect/receive it you lose it and would have to reapply for it. That way those who would not really miss it would lose it, but those who rely on it despite comparatively high earnings would still receive it.

I totally get why cb is paid to the mother and agree it should be. Particularly for those families where the man is controlling about money.

Just don't agree with making it a stay at home or go out to work issue. If they are to do this it should be based on household income not just one salary. Appreciate that would be harder an more expensive to do.

FWIW dh earns over the threshold an I work part time. Combined our salaries are still less than 2 people earning just under the threshold. After childcare, tax, ni, pension, professional fees etc cb is pretty much all I have left. I know that when all dc are at school I will have more left over but sometimes I do think life as a sahm would be much less stressful with little difference financially, but we all pay in some way for our choices and I am fortunate that it is a choice.

For me it is the unfairness of it that is the problem. But then who has ever called the benefit system fair?

Yes, but why is it always the women who earn so little? Women will never get anywhere as long as they are the ones sacrificing career on the altar of male careers. If they now get their come uppance for giving up careers through the CB changes that's brilliant. Why shouldn't they work? Also why is childcare a woman's cost? Surely you add together your joint earnings. We worked for a year when the cost of childcare was half of each salary.

The sacrifice was worth it as roll on 20 years more and the 5 children went ot brilliant private schools had two full time working parents presenting them with equal and nonsexist role models and home and it is surely no coincidence that my daughters earn what they do in London in their mid 20s because their role model at home was two full time working parents rather than women are cleaners and housewives and wipe bottoms whilst men earn the big bucks. In fact ultimately I earned 10x what their father did and they can graduate debt free etc. It virtually always pays women to work full time and build up careers. If you lose CB as a result of being ah ousewife may be the answer is not to be a housewife.

£500 a week - Sorry that should be a month!!

Arf Xenia at your junk food comment [hgrin]

What I was getting at is that 40 years ago, it was more difficult for middle class mothers to work. Many workplaces were uncomfortable environments to be (as in, women weren't welcome), the precious moments bollocks was almost certainly even worse and society in general was far more disapproving than it is now of women maintaining some kind of independence. A middle class woman who chose not to work then was not necessarily stupid, she more likely simply didn't have the energy to be Shirley Conran.

I couldn't agree more re the significance of our incomes being treated differently for tax purposes. It worries me when women (especially) start calling for the reinstatement of the married man's allowance.

being treated separately for tax purposes I should have said, not differently.

I think childcare costs are higher than most peoples mortgages or rent so ifs huge chunk on 20k a yar gross i paid £9600net nursery.

It will be interesting to see impact on economy.

As most people i know are not spending

lots buying 2nd hand ebay, carboots, nearly new.

Think retailers will really struggle.

argos just announced another 75 stores shutting.

I know retail may not seem important but most of uk jobs are servce sector/retail. Taking on women.

I kepe asking myself how are we going to save for futures of the kids at moment its impossible.

Hubby feels like he works hard puts lot money in but dont get much out.

Xenia I wish you could have met my mum. There was some brouhaha a while back about women who'd never worked's pensions - my mother, who worked all her life, bringing me up as an unmarried mother at a time when that people pilloried her in the street for it (I remember it happening) was absolutely livid that they'd not taken their pension into consideration when they chose to be housewives!

yy Mam.

It's a lot of money the govt are taking out of circulation by doing this. Bloody idiots.

I know that. I remember the 1970s. I was working in the 80s. My mother though did work for from 1984 for a long period to support my father through medical school. Her own mother was a sole supporter too - as she was widowed within months of having the first baby. There are a lot of women in the UK who have always worked and supported families.

Anyway back to now - In general I am a low/flat taxer and would like all benefits, credits, allowances even for pensions abolished and a very very simple undistorted pure tax system in place where people take decisions based no what is right for them not whether they get 50% tax relief for the contribution or whatever. We don't have that that free market at all at present. We have one of the most complex tax and benefits systems ever created on this planet. That is such a huge waste of resources.

I would certainly support abolition of tax credits and housing benefit as well as child benefit in return for a simpler tax system and a lower flat tax rate.

Xenia you and I are chalk and cheese, but I do enjoy your posts.

oh and I'm an old Marxist, but I agree with an awful lot of what you say.

I don't think it should be a SAH/working issue either, but there has to be some recognition that if you're basing it on household income (which most MNetters seem to want) and both parents are working, they inevitably have higher child care costs than a household where one parent can stay at home.

If the household is 2 earners without any childcare costs, thats different (but they probably don't have children anyway and wouldn't be entitled to child benefit in the first place !!!)

Even without childcare costs, working people generally have higher outgoings.

Keep child benefit universal and be done with it.

Households with 2 earners, and the children are all school age, won't have huge childcare bills though surely?

Perhaps a few hours of care before and after school, if needed, but not the same as having a smaller child in a private nursery all day?

And what about households with 2 earners who have a family member looking after the child/children?

My friend and her DH have a combined income of £72k, but neither is over the £50k threshold, and his mum looks after their two children and they don't pay her for it!

And lets not forget, we're NOT just talking about families with a SAHP who get hit, we're also talking single parents. A single parent earning over £50k with childcare costs is losing out on CB money they most likely need to help them pay for those costs. Yet a family with 2 earners, can have a combined income of £90k (say £45k each), and they're still getting full CB.

There are so many different family situations to factor in and that's why the whole thing is unfair.

The fact is, this cut was not bought in to save money at all. It was purely an ideological cut to make it look like the richest are shouldering the burden. It is not the top 15% of households losing this money as they keep trotting out, because a family of 5 on one income of 50k are in the 5th income decile. It is all so wrong on so many levels that I can't believe it received royal assent. If they wanted to tax the rich, why have they given the top 1% a 5% tax cut?

ihategeorgeosborne what do tell is the 5th income decile and how can I use this to help explain to dh why he works hard yet I still buy cheap food?