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.

and tbh if you were living in that house (with the 20k rent) and became ill after having been paying hrt on an income of in excess of 100k and you did not have savings and capital over the limit allowed for claiming i would be happy for your rent to be paid whilst you recovered from your illness xenia. that's what the tax and NI system is about isn't it and it's why it used to be linked to contributions?

I think they should put a top price limit on London property at around £100k per bedroom. Rich people can afford to live outside London and fly in if necessary. It would then leave ordinary people to get on with real life and keep the city moving - we really don't need bankers taking up our precious housing stock.

I put a single mother into a benefits calculator. She gets her rent paid plus she gets income support, child tax credit and council tax benefit and free prescription charges. The IS and tax credit (leaving aside child benefit) were about:

£71 income support over 25 one child
Plus whatever child tax credit is

The single mother paying £13k full time day nursery place for one, about £13k mortgage interest on her £150k loan, about £13k tax, travel costs to work , work clothes is worse off than the benefits claiming mother.

So you're talking about a single mother that normally earns £50K, even with your generous nursery fees and high taxes she still has £11k tax free money per month to spend on what she wishes. Nursery fees really ought not to be more than about £180 per week, totalling £8100 per year. This leaves you with an extra £16k disposable income - rather more than anyone on benefit would ever receive.

You need a new calculator Xenia.

Tax on £590,000 is I'm afraid very high - she pays income tax and NI of £14,218. This is what the benefits claimants don't realise - women like our one of £50k single mother no payments by the father isp aying over £14,000 out a year in tax and NI alone - any net pay calculator on line will give you that figure. It is 100% accurate. She might of course also have student loan repayments too but I left those out so I am 100% right about her tax.

Then we assume she has one not two children in full time day nursery in outer London which is £250 a week - remember she will be commuting and she needs care 8 - 6. She may well need care in the evening too as many of the squeezed middle work late often and often for no over time (in order in part to keep the benefits claimants). It might well be a bit cheaper somewhere but she might also of course have 2children so fhte fee is moer like £500 or on yhour figures nearly £400 a week if 2 chidlren. The £250 a week particularly if you assume may be two children and that she has to work late sometimes - few people can commute to work and get to the nursery for 6pm actually so I was very careful in my calculations , is correct.

She has borrowed £150,000 for a mortgage on a 2 bed flat in outer London (remember it is only likely to be in outer London that our single mother is likely to get aj ob on £50k a year). Her 25 year repayment mortgage costs her £13,500 a year.

In essence her tax is about £14k a year, her childcare £14k and her mortgage £14. Her twin sister who has never done a day's work in her life since falling pregnant at 16 has no tax to pay no childcare costs no mortgage and has her prescription charges paid,.

Our hero working mother has about £7k left after tax, mortgage, nursery costs btu she has to pay for travel, clothes and all the rest.

My point is that in the short time single mother on £50k is in the same fnancial position as her twin on benefits and yet the benefits person who sleeps late every day and does nothing and is kept by her hard working sister in effect and all the othe squeezed middle is just as well off. This is the big issue for the state how to make work pay and how to ensure the idle twin feels like is very tough compared to her sister who works all hours. Obviously the £50ker hoppes to get promotion to £100k, will not have bnursery fees to pay once children are at school and after 25 years will own a home outright so she definitely took the right decision in giong to university etc but it is a long term gamble.

your point does not stand up. even if your figures weren't wildly exaggerated you'd be left with trying to say that a disposable income of 7k is the same as a disposable income of 2 or 3k - it's not. then you'd be left with saying that living in a damp council flat on an estate is 'the same as' living in your own 2 bed flat that you own and that being stuck in said flat staring at the walls because you can't find a job that pays enough to cover childcare is 'the same as' having a job with prospects, getting out into the world every day, looking forward to being an outright property owner etc, etc and endless etcs.

not to mention your 50k lady is looking at a couple of years till she gets 15hrs a week paid for of her childcare, then a year after that only paying for after school clubs etc.

there is no comparison. to pretend otherwise is a farce.

How can anyone say my figures are wrong when if you go on to a tax calculator in two seconds you can see tax on £50k is £14k? All this illulstrates that the poor do not know they are born and have no idea of the burdens on the squeezed middle. Yes tax on £50k is over £14k!

I said in the immediate term. I also said in the longer term one hopes the worker does benefit but immediately not. I had not included another child for childcare for the worker which would be another £250 of £180 a week. I had not included her travel or her work clothes or babysitting when she works over time. There is no doubt that the net pay of the £50k er may well be about the same as the single mother in net cash terms.

This is why the state has to work at making work pay. At the moment work does not really pay that well.

Fwiw, it is certainly true that when working with 2 children, out of the home, my salary did not cover the costs of working - ie childcare, travel, tax, etc etc.

The tax burden is huge on working people, and in particular people in that 40-80k region, because that is where the 40% kicks in. After 40k, is it really fair that the government takes 40% of everything more you earn? And that's before you hit national insurance etc, which takes another cut.

That was not the intention of the 40% rate - it was supposed to hit the very wealthy, not the 'doing ok'. When introduced, 5% of people paid it. Now it is 15%, and far from raising the thresholds (which have not been raised in years, despite high inflation), the Chancellor is DROPPING the threshold.

It would make far more sense to leave child benefit as it is, or make it a tax allowance, raise the threshold for HRT to about 70-80k, and then increase the 40% rate to about 43%, and abolish the 45% rate.

I bet that would make more money too.

I feel quite indignant about these changes. Let me explain further.
I am a single parent, have been for 13 years, since my ex husband dannounced 'family life is not for me'.
I work full time as a school teacher, own the house I have strived for, providing for myself and my two, (now teenage) children. I have worked damned hard to be independent and a good role model for my sons.
My ex husband pays the absolute minimum, (though fairly set by the CSA )maintenance. This amount only just covers the school dinner costs for our children.
In the last 6 months my partner has moved in to my house. He has three children at university, supports them with additional money and in addtion contributes £1000 per month towards his former wife and family house. (though again this will change in the long term)

Now I find that due to his wage being in excess of £50,000 per year, I lose out on CB or he is taxed to take acccount of the CB paid to my and my children.

I have a number of issues with this and not really to do with the money side. More the principal.

I have brought up my children and have been financially independent for most of the children's lives and as I am the one who claims CB -why is it my partners wage is the decider, why not my wage? I feel dis-regarded as an independent female.

Why does my partner have to be responsible for my children? - in addition to his own - yes independent and at uni....but still needing financial support ( but there goes another thread completely due to funding.)

Why should my partners own family miss out on money so as he can provide for my sons. It will be impossible for him to continue with this level of support for his own children, as he feels he needs to make up any deficit to me.

Why is my children's own father not responsible for his children. His wage is less than the £50,000. This isn't taken into account. If the money paid to me is going to reduce, why isn't my ex husband being asked to contribute more towards keeping his own children? Why isn't his maintenance set to increase?

I hope posters on here can help me see that my principles are out of line..make me, the female, the mother and the only person interested in bringing up our children, feel valued in this change.

Milly in my view first families always come first so he should not take money from his own children to support yours. May be you could take a second job to make up for the loss of CB. Given I don't have any help from my children's father and will lose all the CB because of what I earn nor do I have a live in lover helping I suppose I see your position as more not less fortunate than many.

I wonder if there is some way to make your children's father pay the loss? In fact may be you could write to him to prevail on him to pay more in the light of what is happening or will he say you have deliberately picked a much richer lover so much face the consequences of so doing? Or just chuck the lover out and make him pay rent elsewhere.

very good points milly. we do not hold bio fathers meaningfully financially responsible for their children but a man who lives in the same house as them is assumed to be financially responsible. crazy really and says a lot about what we think of women and children still. whoever is having sex with a woman is responsible for her kids? rather than a man is responsible for his own children we see that odd throw back still that somehow sex and domestic labour is required for a man to be responsible? i can't word it well i'm afraid.

xenia she's not more fortunate than you at all - you lose it and the need for maintenance from your ex because you earn so much. she loses it because her new man earns likely far less than you and has his own expenses and isn't her children's father anyway.

not to mention that her work is societally valuable and given the amount of time she's been in it if there was any justice she'd be a hrt payer herself.

Thanks Xenia, you did actually make me smile!
I know, as usual as a single parent or in this case as any parent, stop moaning and get on with it. I know you likely feel the same. Ex's just seem to be able to choose to walk away and even if mainteance is set, it really isn't enough.
I just feel invisible in this new CB system, yet have been vital to supporting my children.

My smiles were around my ex - not a chance, he will be more than happy for another man to pick up the tab for his children. I know men who would hate the thought of that...not him!

And the second job - I currently work 12 hours a day, plus planning/assessment etc on a Saturday - usually another 4 or 5 hours. My children don't get to see enough of me now and my energy levels wouldn't be able to take anything extra.I can only type this because I am off ill.

We will manage on the money I earn. We always have. I don't want support for my children from my partner and wouldn't take away from his existing support for his family.

Thank you so much for your support 'swallowed a fly'. Good to know teachers are still valued by some!

I will also add Xenia, my ex owns 30 acres of land, has converted buildings to make houses owns by to let properties and drives new private plated cars. The boys tell me he has just spent £750 on a mixer for this kitchen!

My 'lover ' certainly isn't the richer man, my ex's maintenance is only based on his 'working wage' not everything else he owns or makes money from!

It's not true that a man who is having sex with a single mother is deemed financially responsible. Just a man who moves in with a single mother and is therefore contributing to the household bills. It's always been the case for the single mother claiming benefits and not just the workless but those relying on tax credits to bring their income up a to a livable level.

Now that CB is means tested it's suddenly not fair.

Was being a bit tongue in cheek about the sex bit, just in case anyone thought not .

You do not lose maintenance from an ex because of how much you earn and whilst I have great respect for teachers. Just because itciscseen as a better job for society does not mean it should automatically be a higher rare job. Without dustbin men and dinner ladies where would society be and if they all become higher rate taxpayers who is going to pay for this society. By the way many heads and deputy heads are higher rate taxpayers because they have climbed the managerial ladder as with any other job. If you are sharing a house as a couple why should the other persons income not be taken into account? It halves the cost of accommodation and bills.

losingtrust, I can see the bit about sharing household costs - and if I were claiming housing benefit for the house we live in then of course I would expect to lose this. However I don't think that is the same as being expected to be financially responsible for another man's children when their own father isn't..or could be more responsible for this. There is no effect on their dad from the children of our marriage losing money due to CB changes, only an effect on the finances and tax affairs of an unrelated man.

and still doesn't address the issue of me being negated as the mother and the person who has brought them up.

Milly, it's just the way means testing works. You are deemed to not need it and you wouldn't have agreed for this man to live with you if he was going to make you suffer financially, would you?

Yes I agree about mean testing and just don't agree with the whole concept of father's not being responsible ( enough) for their own children. I find it hard to justify that another man is deemed to be responsible financially for them. Coupled with this is the fact that I have been responsible and yet I am discounted in any of it.
Completely not about CB but I suppose this all goes back to CSA dealings. My ex married a lady with a son. In this case he was deemed financially responsible for this child and could claim via the CSA for 'expenses' related to this child. This resulted in my ex being able to take off money from his wage beofre maintenance was calcualted, therefore making his maintenance payable for his own children less. His allowance for this 'other' child was more than he pays for both of his own children. How can that be? The 'other' child has a father of his own working full time and earning £75,000, a mother working full time earning £40,000 and my ex is allowed a larger sum to keep this child than he pays for two of his own. My family lived, at that time on my part - time teaching wage and a pittance of a maintenance payment. The tax payer would have footed the bill for that if I hadn't gone to work full time.

I don't think the tax payer should have been called upon to look after our children and indeed because of my return to work, weren't but again more complications of rulings regarding who is responsible for children.

sorry - I am going to refer back to the original message if that is okay : The system very certainly isn't fair, esp. with respect to single parents etc. but I have a particular gripe about people who I have personally had complaining to me:

Me and DP both earn approx 30kish - we get to keep our much needed CB, we pay approx £900 pcm in child-care.

I constantly hear off single income families, with one SAHP, how unfair it is that (we) joint income families get to keep CB - and I am assuming there single income is somewhere in the 50-60K region.

I would swap with them in an instant - forgoe CB, pay more tax, stay at home and have DP earn over 50K and not pay child-care - approx £900 pcm.

I will reiterate: I think it is a poorly thought out system. But I am really sick of hearing (two parent) over 60K SAHP families stating how unfair it is that we get to keep CB, which is a drop in the ocean compared to our child-care costs - have I mentioned about £900 pcm.

Childcare costs are very expensive. We had a daily nanny for 3 children under 3 and later for baby twins and 3 older children. It is a huge commitment. Of course it can pay off as you then have both careers going forwards for 30 years after that.

The issue of live in lovers is that which benefits people have had to grapple with for years but have not touched the middle classes until now. Does he stay>? How many nights? Is he a lodger? Is he a lover? They are gearing up a load of HMRC workers to make telephone calls to tease out this kind of information.
You might be in a home with 2 wives living there or polygamous in some other way - 2 men, one woman, all sorts. What fun. Thsi si why the universal child benefit and before it the child tax allowance going to everyone with children worked well.

Life is never fair anyway but presumably Milly who gets some maintenance from her ex (I got none for 5 children and paid out to him on divorce) and who is also now sharing heating bills etc with a new partner who lives in might well be better off than me losing all the child benefit without two men in effect at least paying something to her although I doubt it as I earn quite a bit but even so it just shows how complicated some of these cases are. The tapering of loss of CB between £50 k and £60k just makes it even more complicated.

What we really need is tax simplicity. One possiblity os CB for all but not for third or subsequent children and perhaps free bus pass and heating thing for people over 75 or 80 rather than everyone over 65.

yes but it's 'child' benefit - not housing benefit or income support. it's a benefit that has always been, historically, about the mother and her children. it is a benefit that has fed families with alcoholic father's whose pay pack rarely made it past the pub for example. of course a live in lover means you shouldn't get your rent paid etc and of course he becomes a part of the finances. i do think though that child benefit at least was seen as different to others. anyway.

i tend to agree on the couple thing - if you have both of you working and earning under 50k each (especially when you're only bringing in just over that between you) and you have childcare costs in order for you to do that then no, i don't believe a family that earns that with one income and can afford the lifestyle of sah parenting and doesn't have childcare costs has any cause to moan at you. i think you've expressed that well alisarah and have made me believe more confidently that the joint v single earner business is a red herring and not an issue except where it is a single parent household so there is no choice and childcare is incurred.