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.

xenia why do you have to turn every debate into one about sexism?Some women dont want to work they want to bring up their kids full time,instead ofbeing told to stay at home by men now we have women like you telling other women to work,the whole point of feminism is that women have a choice.

Not going to argue about the morality of it all but am still FUMING about the taxation element - how in any shape or form is it fair for one person to be taxed on income they don't receive? Why should my husband get taxed when he doesn't get the child benefit - its not his money? Tax ME and then the system is fairer surely? But oh, hold on, the majority of the higher earners are MEN. Bad publicity if they started taxing lower paid women, right?

Is there such a thing as an illegal law? How can this be legal? Does this happen in any other country anywhere?

Ambersocks but it is a debate about sexism, if you really genuinly argue that CB is a means of protecting mothers from financially abusive spouses.

A benefit can't do that it just shifts the dependence from being on the husband to being on the state.

Xenia nannies are far more expensive for school age children than a couple of hours of wrap around care,cm hours for those that don't have part time hours,friends or relations to help out.

Nannies are the best option for children imvho but you pay more at school age.My sister(who earns more as a family and is keeping her CB) had one which she shared with another family but now juggles her hours with her dh and grandparents,think the nanny does a couple of hours a week now as a favour.

Who, it's a very valid point. Women fought for years to get separate taxation of men and women. I remember it all clearly. It was a massive battle and very very important. Also the origins of child benefit was a benefit originally paid to mothers usually who didn't work as many husbands who did work paid women virtually nothing, drank all their income and all women had left was child benefit. There are still women today with rich husbands who are left with not much money who don't work and child benefit is how they feed the chidlren. That has now all been cast aside.

If you let a lover stay you now risk of course losing your CB too if you earn nothing and he earns loads and it will not be clear easily when someone stays enough to be counted (obviously there has been the same issue with unemployment benefits for years).

I agre we do not need to discuss sexism on the thread although it certainly is a strong message from the state that the houseparent is not liked and they want both to work which is one I would support too particularly now singl person allowance is heading for £10k a year so it makes sense that the lower earner earns at lerast 10k as that will be tax free whereas it could be taxed at 52% tax/NI in the hands of the higher earner.

Hi. We have opted out as my husband earns over 60k. How do I ensure my State pension rights are protected? Thanks.

I think the state is saying the national insurance credit you get as a stay at home mother is unaffected as long as you have claimed child benefit before (not sure about new babies) as you are still in the system but might be worth checking if we think there will be any state pension at all by the time we are all 67 or 70 or whatever age it wll be when we get it. I would not bank on its still existing.

Thank you that's very helpful. No I will definitely not be banking on it still existing but it is good to know my NI credit will be unaffected for the time being.

What I would really like is if someone for whom money is no object would mount a legal challenge on the grounds that you can't be taxed on money you do not earn, particularly since the recipient of CB is still not legally obliged to declare to anyone else other than the taxman that they receive it (afaik). If such a person happens to be reading the Mumsnet forums at this particular point in time, hello

Also resent the implication in the (un) popular press that if you have (like 300,000 people) not received a letter yet from the taxman, and do not immediately jump up and down waving your arms begging for the removal of £1,750 a year, that this makes you a 'tax cheat'.

This is from the HMRC site which confirms what I said. So I think it means as long as you have claimed in the past and you are in the system you are okay. Not sure what will happen if someone has their first child say next week how they notify to claim the NI credit if their partner earns over £60k so no child benefit.

"If you or your partner have an individual income of more than £50,000

If you or your partner have an individual income of more than £50,000, you may be liable to a tax charge called the 'High Income Child Benefit charge'.

You may decide not to get Child Benefit payments, because you don't want to be liable to the tax charge. It's important to still fill in a Child Benefit claim form, even if you don?t want to get the payments. This is because if you are entitled to receive Child Benefit, you can still qualify for credits to protect your State Pension.

High Income Child Benefit charge

Top
If you were getting Child Benefit before 6 April 2010

If you were getting Child Benefit for a child under 16 before 6 April 2010, you automatically qualified for a scheme called Home Responsibilities Protection (HRP) which helped to protect your basic State Pension. This has now been replaced by the weekly National Insurance credits for parents and carers.

You won?t lose out on any protection you have already built up. If you reach State Pension age on or after 6 April 2010, any complete tax years of HRP (up to a maximum of 22 years) you have had will have been converted into full years of credits that count towards your basic State Pension.

If you received Child Benefit for a child under 6, you automatically built up entitlement to the additional State Pension.

Totally perplexed why they couldn't make it fairer - I've just had to "own up" and opt out - I'm a SAHM and will earn nothing/very little this tax yea, whilst DH earns over the threshold - I presume there is no way of HMRC "finding me" as my husband gets no tax relief for his dependent wife or child, and whilst my NI number is linked to my child benefit claim, as I said, I earn nothing, and his tax affairs are not linked to mine.

So as implementation is basically an honesty system (gasp) - why not just ask people to tick the box if their household income is about £100k?

Would it be a fairer system if child benefit was halved and paid to all parents (fathers and mothers) except those who earned higher rate tax? Would need some way of transferring halves to single parents whose ex partners had little or no caring responsibility, but it would work better than the existing system where the care is shared.

This would keep independent taxation and acknowledge equity between parents of both genders. It would half resolve the issue where some families with the same income lose cb while others don't in that those families affected would only lose half instead of all of it.

Only major disadvantage I can see is far fewer families would lose all cb so not so great savings.

the man can claim cb though,it doesnt protect women from abuse at all.

It would be interesting to compare the contributions towards tax and NI of one person earning £60,000, and two people earning £30,000.

I am reluctantly opting out. i am really pissed off about this. Its almost £190 which was paid to me each 4 weeks..

vivienmary based on my (very rough) calculations on Income Tax only a single £60K earner takes home a NET income of around £5K LESS than the combined income 2 people earning £30K each. I would imagine the gap is increased further when you take into account NI contributions.

I might be wrong but if I earned £60K (3 x my current salary) I do not really think I would miss £1300 CB or whatever it was. As a percentage of income it is minute.

Thanks Savannahgirl. I agree it has not been thought through very well. And the back pedalling over the reduced rate to those earning over £50,000 isn't really that generous. And I presume it wasn't on any manifestos (sp?). The only thing I think is that two people working will probably incur a lot more costs in childcare and travel than will one person working. But should somebody on £12,000 a year be subsidising the children of people on £50,000 a year. I don't think they should be.

I'm not opting out. While I have no intention of evading taxation I'm not about to make it easy for them.

You're right vivienmary no-one is denying the fact that CB should be taken away from higher income families - I lose mine and I agree with the principle of removing it. What is making people so cross, is that in some instances families on lower incomes will in fact still be subsidising the CB for families with a higher NET income than their own. Disregard travel costs, childcare etc and bring it back to what a single earner on £60K brings home after tax to his family pot, versus what 2 earners on £30K each bring home to the family pot. Their NET income is higher than the person on £60K. Based on their collective income they are a higher earning family and as such should not be entitled to receive CB either.Why should someone on £12K be subsidising that family either?

I totally agree with Savannah Girl. Another point that the media have failed to pick up on much is what happens to the State pension credits that Mums receive while receiving Child Benefit. For the single mum, this may be a double whammy?? Please correct me if I'm unduly concerned for a friend that falls into this category.

It's a difficult one. It doesn't affect me as I no longer get child benefit for my DC's. But I would be annoyed if my neighbours got it on a combined income of say £95,000 and I lost it. But it depends on if you count people as individuals or households. Taxation is individual but most benefits are calculated on household income. Means testing is always fraught with difficulty.

What reason can they not just change things to marry up with tax credits?

I think they have slashed at it haphazardly with a butter knife. If you don't qualify fine, but don't make it so rules can be bent.

No one on a low income is subsidising those on a higher income as those on incomes above 60k are paying far more in tax than they receive in child benefit.

Something the idiots in Government forgot is that a lot of SAHM or dads are carers for their disabled children.
We will lose some of whooping 81 pounds of benefit we receive a month as DH is just over 50k threshold. Forget the fact that he works evenings and some weekends without overtime (not worth it due to taxing implications). Its ridiculous, we didn't choose to have a disabled child and whilst some can work when u are in and out of hospital every 6 weeks who wants to hire you!
Just another perk of choosing to be a SAHM I guess!!!!

Certainty wont vote for this govt again!