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.

tess we're in the NW albeit an expensive part of it, and yes, our childcare will drop when we don't have a pre-schooler at a private nursery. And yes, my income should go up so overall we'll be better off, but marginally.

Even for 2 children at breakfast club (£9 each, £18 a day) and after school (£12.50 each, £25 a day), you're talking about £215 a week, or £860 a month based on 4 x 5 day weeks. And then you have to pay for holiday clubs if you can't juggle work / don't have help. So it depends on what your interpretation of a "huge" bill is?! (I've also discounted the fact that I do in fact have 3 children so my wraparound care is even more expensive than those figures but appreciate that the general consensus is that a 3rd child is a "luxury" I chose to have and the taxpayer should not be footing the bill for her )

3bunnies, it's from the Institute for Fiscal Studies website. Sorry can't seem to make the link work, but if you type in "IFS - Where do you fit in?", you should find it. You need to enter NET household income not gross. I must admit, I was quite shocked when I did, particularly since the government keeps telling me we're in the top 15% of earners!!

ihategeorgeosborne thanks (didn't actually need to write it again, but I enjoyed it), will go and google under the guise that it might help me if I get an interview for some extra work to make me less 'dependent' on dh. Of course he is dependent on me to provide free high quality childcare for his dc too!

The other thing that really annoys me about this, apart from the obvious unfairness, is the fact that DH will have to do a tax return which we don't currently have to do as he is PAYE. That will be a PITA for him TBH. I know I could stop claiming, but then there's all the issues around HP protection. I also know HMRC have said this will be covered, but I was listening to money box on radio 4 the other day and a tax specialist said you should keep on claiming anyway, as he was apparently a bit sceptical about how they would be keeping records of all this. Also, if you earn between 50 and 60k, you will still be entitled to some of the benefit anyway. Another thing I read somewhere (can't remember where now) stated that another problem with not claiming is that CB triggers your DCs National insurance number cards when they turn 16!

Xenia it makes financial sense for me to work part time and not dh. His career provides far greater earning potential than mine. Am not sacrificing my career for his, it is merely a reflection of financial reality. Having said that it is also true that had I not taken maternity leave and returned part time my earning potential would be greater. But I don't see what that has to do with cb.

I see the point of including childcare costs as well as household income when checking for eligibility for cb. Just have no idea how that would work at a practical level.

Well some costs will be included anyway as the 50000 assessment (if I understand it) will be based on net taxable income, so after claims for childcare vouchers and pensions have been taken out of the higher tax payer's pay. This means that if two parents were working and they used combined income then the couple between them could claim 110 a week childcare vouchers. Would probably even out the differences for school age, not at baby stage though.

With all the costs that the Government seems to have why are they cutting benefits to children and disabled people? I heard that, yet again, politicians are making personal claims for flats when renting their own, travelling 1st class and other such rubbish.
I will still get child benefit but who knows what it will be cut to next year? Once our next baby comes along we will be spending 1k a month for nursery and that's just for 3 days a week! I have to walk a 5 mile each day as can't afford the car parking fee/public transport with these charges. The child benefit we get goes straight into nursery fees, not a savings account like well off people seem to do.
The Government should be talking about how to subsidise excessive child care costs to 'encourage a society of hard workers'. Why doesn't Cameron consider that rather than assuming we are all on the scrounge! I feel it's punishing parents for working full time. I have not faith and feel let down as a female voter.

3bunnies theres another problem with that though because at the moment, there is no obligation on companies to provide vouchers. Another issue with the government's approach to working parents.

Also, vouchers of £110 per week, even if both partners' companies offer it, means you don't pay tax on a maximum of around £440 per month. On the basis that we're not higher rate tax payers, we'd save £88 in tax. Better than nothing, but not likely to make a dent in the £860 before school / after school costs referred to above - and certainly doesn't "balance out the differences" as you suggest.

tilder same for us. I'm a teacher, dh is a GP. He can earn 3-4 times what I would ever be capable of (unless I did what I presume Xenia would like and move 500 miles and stop having a disability to work in the city).

We'll keep claiming though we'll get nothing. I don't trust this government to protect my pension and as dh is technically self employed anyway we're doing a tax return.

Dh earns just over 60k. i do not work and we will lose it for our 3 dc.
Ok its not life or death for us but we are still disappointed as it goes against what child benefit is suppossed to be about.
Also worried about implications for pensions etc. Presume I will still claim and dh have it taken as tax. Crazy system.
Plus since apparently those earning over 60k are in top 5% the actual savings is probably minimal once you deduct costs involved.

Should be based on total household income, how is this fair otherwise.

Maybe there should be state-run nurseries available for all children from the age of 3 months up, or something, and parents pay a small fee for their children attend them?

haha imagine selling that proposition to the precious moments crew.nursery at 3mth
theyd liken it to state gulag and go on about why ave em if you let strangers watch em
there should be tax breaks for working parents using nursery.housewifes dont need free nursery place.what does a housewife need a break from shes not working?free places should be prioritised for working parents,and people assessed as having a need (mental,physical,social or need to train to enter job market)

eachpeach11 Fri 26-Oct-12 14:01:55
Dh earns just over 60k. i do not work and we will lose it for our 3 dc.
Ok its not life or death for us but we are still disappointed as it goes against what child benefit is suppossed to be about.

It's a stupid change to make. To avoid the big step-downs, and to avoid the discrepancy between families like yours and families with two incomes of £45k, and to maintain the fair balance of the tax burden between single people and families they should simply put up the higher rate of income tax instead. That would be much simpler, free to implement, and much fairer. Why won't they do it? They are putting politics first, whilst what's right is of no regard to them.

I agree MrsBethel This would be much fairer, as it wouldn't just be attacking higher rate tax payers with children, who obviously have much higher outgoings than higher rate tax payers without children. Alas, we have an idiotic government who would rather see this as a benefit cut for the rich rather than a tax rise. It is in fact a tax rise in any case, as the claimant (if not the higher rate tax payer) will still get it. The partner on the other hand will face a marginal tax rate of 64% with 3 dc. Totally clueless twats, and to think, they get paid handsomely for coming up with these policies!!

Hear, hear Scottishmummy- that would be great. I could maybe afford to take the bus to work then! If only we could take that idea forward [hgrin]

i think people on higher wages dont need cb,its a nice extra but not essential
we need to prioritise those in need and working poor
boo hoo if mc aggrieved at losing cb,but that money can be redistributed to needy

The other stupid thing is that if they are paying it out - in order to claim it back at the end of the year - to pay it back out again etc, then I can't see where the savings will be, especially when you add on the cost of the admin.

Basically everyone should keep claiming and cripple the system.

We are trying to work out whether it is better to keep claiming and stick the money in something where we either get interest or something (premium bonds?) but can get it out to pay back at the end of the year - rather than saying that we don't want it at all.

The money is currently my only income till the business gets off the ground and pays for DD's school uniform, shoes and lunch. We lose it all but I'm damned if I'm going to make it easy for them.

thats a really stupid point,cripple the system?why to make a churlish point
the public purse is shrinking we are in recession,not all cb recipients need cb
whilst i dont agree how theyre implementing i agree the mc don't need a universal benefit

A properly thought through system would not have any big steps or jumps, and the marginal taxation rates would would be higher for higher incomes.

In our system the marginal taxation rates rise to very high figures for the middle class (over 60%), then drop back down again for the rich.

The middle classes would be happier to pay their share if they knew the rich had to do so as well.

The rich pay far and away more take than the squeezed middle. The first people to pay for this recession were the rich with massive tax increases. The top 1% of us pay 25% of the tax! We have been hugely hit by this recession on the tax front.

if we had one flat tax we would not have these marginal leaps and distortions. We have far too much tax complication.

For those filling out tax returns for the first time do be aware that if you pay to charity you can claim back in cash extra tax on your tax return. You should also declare buidling society interest already which is why it is surprising so many people on PAYE who are 40%+ tax payers don't fill out tax returns. They probably ought to be filling out tax returns already to ensure they pay the 40% tax on their savings as it is only deducted at basic rate.

If it is true as said above that CB triggers NI cards at age 16 it would make sense to carry on claiming it and then have it clawed back and taxed through the tax return. It also psychologically then at least suggests the state knows you are a parent even if they take back what they give to you. I will keep getting it particularly as I get so very little from the state so I would rather like to hurt the state and ensure it has a load of admin to give and take away. If that means less for the huge number of benefits claimants I support so be it.

I sometimes think that there's an unspoken plan that the Government want women/a parent to stay at home. All this talk about broken societies and the breakdown of the family. I certainly beleive that's what the current Government want anyway. So if they keep squeezing the middle, more families are going to have to make the decision that both can't afford to work. Then the out of touch Government get their 1950's dream and won't have to worry about young savages roaming the streets looting and mugging [hconfused]

I think it's a really scary situation. Look at the recent unequal pay cases. If less women are able to participate in the workforce then it's going to really set back women's progression in the work environment. I also acknowledge that men can be affected. In my personal situation my DH does 2 days childcare in week and I do weekend when he works.

Currently we just hope that get through the period until there's a little bit of relief at 3yrs when you get a bit of a subsidy. However I think by the time our child is 3 they will probably of scrapped that too.

oops- have scrapped not of scrapped! My ranting took my ability to write away

Sorry but being a stay at home mother is NOT a choice for me nor is it a luxury!

I simply cannot find a job that makes more than the astronomical costs of childcare for my two under 3 years old.

I really dont understand why this country seems to cripple you the second you give birth and I really dont understand why its so impossible for women to get equal rights, its 2012!