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.

Onlyhappy - as I currently understand it, you can continue to claim the CB, and your dh will have to pay it back by doing a tax return.

I just told my partner this, and he was a bit horrified - he's never done a tax return, has always paid PAYE, and can't see why there isn't a lot of publicity about this, making sure that people are being told they will have to put money away to pay back the CB.

It will be interesting to see what the letters actually say when they arrive.

Mandy - So it goes without saying that if both parents work, they will have childcare costs, which as everyone agrees are astronomical in the UK - well, no, some people have older children, and still get CB for them! There are already tax credits for people paying for childcare, aren't there? Although they do need to be better, and pre-tax deduction sounds like an excellent plan.

There was an example given above of 2 families both with a combined income of 80K - depending on how that income is split affects whether you get CB or not. How in earth can that be fair? (Have just written to my MP asking that question!)

Just to re-iterate it's important not to stop claiming in case your household circumstances change during the year and your annual income ends up being less than predicted, eg because of illness or redundancy. You cannot claim the cb for the whole year retrospectively when you get to the financial year end and discover you would after all have been able to keep it.

That said, you do need to keep it ready for it to be repaid!

Exactly Xenia, markets in housing and childcare are enormously skewed at the moment, and over-regulated. It mitigates against growth. Childcare shouldn't really be a market, I think, and in terms of housing we need much better supply of good quality rentals on long leases. Nothing in it for landlords at the moment, or childcare providers.

we were never all in it together, but cuts do have to be made. I dont know about current child benefit. But Duncan |Smith is flying kite on 2 kid families.
Which the Lib-dems say they will not support.

Beware of politicians seeking cheap headlines about unrealistic things

We will lose our child benefit. My husband (also in the public sector) has also had a pay freeze for the last three years. during which time I have not put up my prices (as a childminder) as a lot of my families are also struggling, though I often wonder why I bother to work 50 hours a week for barely the national minimum wage. Everyone moans about childcare costs but childcarer incomes are pitiful.

But what strikes me as particularly unfair is the regional differences in the value of earnings. In London and the south east £50k a year is not wealthy - it will barely afford you a modesy family home, whereas elsewhere it is "comfortable". Taxation and benefits should be based on disposable income!

remember to keep claiming if you are a SAHM too - the HRP (to ensure years count towards your pension) is linked to Child Benefit.... or is the wage earner going to be hit for pension payments too.... (indirectly..)

About what boffinmum and xenia were saying about the problem of independent taxation vs household benefits. I could be wrong about this, but as far as I can work out, until now only poorer people (i.e. enough to need benefits) have had to put up with sharing income information with their partners. Maybe this child benefit issue will alert a lot more people to this problem. You both seem really knowledgeable about this, and would appreciate your comments (or does this really belong on a different thread?)

I don't consider this potential silver lining worth losing the universal status of child benefit over though. So, back on track:

CHILD BENEFIT SHOULD REMAIN A UNIVERSAL BENEFIT

PS - xenia, sorry to be a pedant again, but as I said upthread and as far as I know, it replaced tax allowances AND universal family allowances.

I think some people share information, some don't. However demanding that people do for the convenience of government administration, whilst at the same time failing to give any legal clout whatsoever to unmarried couples to insist on this for other purposes, puts some people in a very weak position. This is usually the lesser earner and in the vast majority of cases this is going to be the female half of the relationship.

We have a choice. We can reform the law properly so that there's a completely level playing field in terms of disclosure for people of all social classes, whether married or not and of all sexual persuasions. Alternatively we can have a situation where people have completely independent financial affairs and are assessed accordingly. (At the moment this only applies to unmarried couples when alimony is being worked out).

My preference as a feminist is to have independent assessment and responsibility, access to benefits and taxation regulations. Fairest all round.

my dh works hard, and so earns above the threshold, my company would only have me back full time, so i decided (based on my job taking me away overnight most weeks for a night or two, and having extended and at times unpredictable hours) to not go back and become a sahm (or shambles as i feel i am at times!) I am fortunate that my dh is lovely and will always prioritise spending on our ds, so he does get to go to groups and classes, but i fear other families might not be as fortunate and children from relatively well off parents may have used the cb for basics and activities which would no longer be available. i would like to think that surestart centres would offer some levelling of activities available, but as we live on the border of three counties our nearest three centres all offer different numbers of classes and the county we live in only offers one free activity a week, it would seem that if we lived 20 mintes drive south that we would be at the childrens centre every day, so these don't seem to be consistently funded either.
i agree with posters who say it is a benefit for children not parents, it is also my understanding that it used to be paid to mothers through the post office and collected weekly to pay for essentials, seems that the reason for cb has been totally lost and is not about what is right for children at all, and all about balancing the budget, in a strange, complicated and labour intensive way!

Dear Xenia

In the great balancing act of life dh and I both worked. Until he got his current job a year ago we were earning the same basic rate of pay on paper; I chose to work at 0.6FTE which ensured minimal childcare costs (I had a particularly good employer and worked 30 minutes less than school hours for 4 days meaning I did all the pre and post school childcare) and he received on call supplements so his take him salary was bigger.

His training contract came to an end and he was required to find a consultant job elsewhere. The current economic climate meant that we had to relocate and he now earns as a basic salary much more than I did (though not equal to our previous joint income). I am not working because there are quite simply no jobs. I am at home and do enjoy that but loathe to work to earn something which wouldn't cover the costs of childcare for one preschooler and for three in school holidays.

We will lose our CB and it will be noticeable. I don't mind other than for the myriad fairness reasons described elsewhere. You don't think I ought to be a housewife - what should I be instead? Who is going to magic me a job that suits my skill set, give me part time hours and pay me like before so we can balance the books?

And now thinking about the loss of CB, the forever pay freeze, the doubling of pension contributions (and moving to a more expensive part of the country) - hmm - squeezed middle it is.

Atia the vast majority of households with 2 working parents ( who claim CB) will have some child care costs - i don't know what the age is for letting older children go home and let themselves in, but I'm guessing it's 13 or 14? It's payable from 0-16.

And you're wrong in setting out the child credits pay for childcare - have no idea what the threshold is for receipt of child credit but it's very low, would suggest small minority of families qualify.

princess you said your DH works hard so he earns above the threshold. As posters have said above its not as black and white as saying hard work equals higher pay. My H and I both work damn hard but due to pay freezes / redundancies in the industry (we're both in the same sector) we're not earning much more than we did 5 yrs ago.

Boffinmum I totally agree with your point about taking career / childcare decisions based on lifelong earning potential. I get so cross when people just look at the immediately difficult years and don't add up the long term impact of stepping out of their careers.
Xenia, I was surprised to hear you speak harshly of part time working. Surely, for those in jobs where it's feasible, part time working is the perfect response to this arbitrary CB limit. I am able to work 3 days and keep my income below £50k, beyond which point I will face a 78% marginal tax rate. There is a guy in my workplace in the same situation who will be moving to part time working in January, in response to this change.

So this Government policy is decreasing aspiration and reducing incentive to work.

Dh and I have never received any benefits - not a single tax credit or childcare voucher despite putting 3 children through nursery. I am so angry about losing the only contribution we got for raising three children. So dh got the opportunity to reduce his hours and me increase which means we won't now lose CB. So we are taking it- end result to the government is a net loss as dh will no longer be paying 40% tax. Wonder how many other people will do this sort of thing. Also if the end result is it costs more to police the system than it saves-what about the loss of all this money going back into the economy? we used the money for shoes, clothes, swimming lessons. It would have been a real loss to us.

interesting, googlenut. Are others going part time (or considering it) in response? DH and I have taken advantage of different situations over the past year and we'll both be around 40-50k so in the golden zone ... gosh, all those luxuries we have in our lifestyle - that lovely static in Wales for a fortnight each summer, those basic kids clothes that have lasted for three boys, gosh, we even buy meat sometimes!

In our situation, DH earns between 50 and 60k and I'm a stay at home. We're currently trying to save for a deposit to buy a house, but we've decided that DH will pay extra into his pension to take his taxable pay back to 50k. It's not ideal, but we really don't see the point in paying 42% in tax and NI on income over 50k and lose nearly 2,500k in child benefit.

princesssmartypantss is right. Cameron and Co have lost the meaning of what CB was intended for. They have visions of us swanning around spending it willy-nilly. The reality is, as most posters on here are saying is that we are still using CB for essentials. T

Squeezed middle again [hangry] being penalised. Most people tend to live within their means. So if you earn more, you tend to have a bigger house. But that equates to a bigger mortgage, bigger bills etc. So we are in the same boat. We all have kids who eat us out of house and home, need so many more clothes as the kids grow out of them so fast etc etc.

In 2010 DH was made redundant. My salary covered us and he luckily found work 6 months later, with a 25% wage cut, but it was work and we accepted it. We sold his car. Then in 2011 I got put on part time, taking a 40% pay cut. I set up a small business part time to try and make up some lost earnings. I found out I was expecting. I had DS in September 2011 and all the while was running my business, working around him. Then in January 2012, was made redundant. I managed to get a job, earning for full time what I formerly earned in 3 days. Plus I have childcare costs and the cost of everything else has increased so much. I don't pay into a pension anymore as I can't afford the payments each month. I studied our bank statements since my son was born and worked out that if we lost CB, we would be overdrawn every month. We do not fall into the income bracket that is affected by this change but it I empathise with people who need it.

They just screw the same ones all the time and it stinks!

A single parent on minimum wage NEEDS benefits. Those of you on 50k plus, single or otherwise do not NEED this benefit.

Yes it is unfair how the Government are going about it but being poor and NEEDING a benefit is when you try to make your electric last the weekend so you go without something else. It is not one of your darling children missing out on a ballet class!

I doubt most of you have ever seen a prepayment gas or electric meter, let alone had to use one.

I will probably get slated for this post but before you do, ask yourself Do you honestly truly NEED this benefit?

I am not sure what is going to happen to us DH is being made redundant in Feb so where does that leave us! Plus a stay at home mum (2 kids) one is disabled so receive carer's and DLA. But that may change too. Feeling very insecure at the moment. Maybe C and his gang can take the disability away too!

But it's not a benefit like housing benefit, it's a payment from the government to acknowledge the added cost of having children. Before there used to be tax breaks for those that had children but not anymore. So when this is lost there will be nothing to acknowledge that those on 40 per cent tax have children to bring up.

Blues, do you think cutting cb for wealthier families is going to increase the amount given to poor families (single parent or not)?

Because it won't. If anything, eroding benefits for middle income households makes it easier and easier to make life harder for everyone.

I am well acquainted with prepay meters btw.

My advice to most is keep claiming it even if you earn what I do. All it means is it is clawed back on the tax return on which you may find you can claim allowances for things you had not realised. You might even find if you go and read a few good tax websites that by the time you add on pensions, charity contributions and work expenses you don't have it clawed back at all for those who have never claimed what they might on a tax return.

If you are in PAYE you will be written to very soon my HMRC asking if you want to keep claiming it. I suggest saying yes. They aren't bothering to write to people like me - self employed.

The person above syaing in the past it was just those on benefits who had to disclose if they had moved their lover in. Indeed - this is the first time that those not on benefits have had this issue - who stays the night, when do they move in, what counts, how many nights a week, what does that new lover you are about to move in earn. In fact it might be quite useful - in my view if you purport to love someone and indeed marry them and will be together for life it is not too unreasonable that you know what the other earns and owns. I know some couples choose not to disclose that but it's a bit weird not to do so. We have far too many mumsnet threads of women who know nothing about their hsuband's finan ces on a split up/divorce at all. I wish they spent more time reading each other's tax returns and pension statements than fussing about what high heels to buy. If this move means couples ask each other about implotant financial matters, perhaps make a will, consider inheritance tax planning etc it could be a good thing.

(What is interesting is why are so many women married to men who earn so much more. Did you seek them out those men or were you brought up to make your career play second fiddle to his?

Part time for some women can be the worst of all worlds as you lose all hope of future promotion often , get off the path to riches and still end up as muggins at home with a husband who thinks your job matters not and makes you do his washing and yet without the full time hours at home a housewife has although in terms of being able to get back to work at some point and try to redeem the career and move from the Tesco shop floor to the board yes part time at least keeps your hand in but why not put that man at home with babies nad nappies for 5 years or on part time hours whilst his wife becomes the hospital consultant? Far too much sexism around. At least Cherie Blair and Nick 's Clegg's wife MG carried on a proper career. Mrs Cameron is part time and Mrs Brown gave it all up. Mrs Osborne gave up most work to mess around at home on very low pay writing books.)

I'd love to know what you do for a living Xenia?

I don't want to say. I don't like when people gather information from my posts and put them altogether on one thread as I try to retain some confidentiality. If you searched my name on here and read a few threads I am on almost every other day someone says what I do or what they think I do.

Anyway it's 8am, I've eaten my bacon and eggs, 4 of the 5 children are home (I can hear one getting up), so now I'd better work as I have a heap of benefits claimants and child benefit recipients to keep so I work 50 weeks a year for the good of this nation without getting much thanks.... laughing as I type. Washer emptied and put back on and dishwasher on).