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.

no offence taken sbg

I am not even close to being directly affected but I can't quite accept that this is really happening. This is such a basic central issue for women, for the structure of social securtity etc That it is being done in the name of 'fairness' makes me giddy with rage. For once, I find myself in total agreement with Xenia.

The people managed to make the Tories look stupid over Poll Tax. The people can try to do the same over this crazy policy. Mums - time to make a stand?... Enough's enough?

I am a little confused. Why would anyone on 50k a year need or miss £20 a week?

I'm another one who doesn't really understand the difference between dual and single income households.

I am a single parent. I believe in the benefit system being a safety net for those who really need it. I went back to full time work when I became a single parent because I didn't feel that I personally should claim benefits when I was able to work. Child benefit, being a universal one, was the only one I continued to receive.

I've worked hard. It's meant I've been able to gradually get to a wage that now puts me a fraction above the limit. Bit of luck, bit of sacrific, lots of graft.

I understand why there is a feeling that not everyone needs this benefit. I can cope if it is withdrawn. But the way it's applied feels like a slap in the face.

I don't understand how it is still 'needed' for couples who bring in a much higher household income.

I don't understand why I am therefore deemed earning too much to receive it, but the couple next door bringing in together 95K aren't?

Though can I ask a stupid question - is the earnings limit before tax, or after tax?

pumpkin - its based on his net adjusted income. Here's a link to work it out.

This is a genuine question not an attack, why would a family with a wage earner of over 50k need cb. My dh earns 21k and I am a sahm partly due to my disability and we have four children. We are not rich but we manage fine.

Panda

I too often wondered that, but realised that like any other income people become reliant on it. Some who don't need it keep it for savings, trust fund investments, uni fees,. Those on 90K beats me, I don't comprehend either.

We would however really struggle without cb isn't that what it's for families that really need it for day to day childhood expenses?

We will lose it next year as well, for 4 DCs it's £242 every 4 weeks.

My DH is already paying more in tax than a couple earning half his salary each, I am of the opinion you do not get to earn over 50K without working pretty hard, you probably have a degree and student loans and work a lot more hours than 9-5, then you work really hard for years get a pay rise, it gets taxed at 40% and you lose your child benefit as well.

So my neighbours can still earn 99K between them and not lose their child benefit, the whole thinking behind this is a complete disgrace.

I would also love to know where all the money is coming for to write the letters, file the replies, chase them up etc it will probably be as wonderful as the Child Tax Credits system.

pom - it's based on adjusted net income. Here's a link to work it out. It might be that yiu can reduce that income by way of salary sacrifice. So, if yiu can swap some of your gross salary in return for benefits from your employer or increased pension contributions. Although, someone up the thread made the point that yiu have to factor in the risk of non-performing pensions

And sorry, it is not correct that one person earning 60K pays less tax and Ni than two each earning 30K as they are both benefitting from the initial tax threshold of (soon to be) 10K and also do not have the higher rate tax threshold kicking in at 43K ish.

Dh earns (gross) about the same as dsis and dbil combined (gross) but they bring home a lot more net income than he does.

Many people claim it just for the protection to the state pension. At least that is the case for many of my friends and acquaintances.

x-post with sweet kitty.

Panda - If you have 3 or more DC it isn't £20 a week, it's nearly £50 plus a week. We will lose nearly £2,500k a year with 3 DC. We are not on the breadline by the way, but we can't afford to buy our own home. We pay silly rent to a private landlord. My DH commutes to London every day and that in itself is expensive. I do not have the luxury of saving the CB. The DC always need shoes, school trips, etc. We will really miss the money TBH. I could accept it if it was being fairly implemented, but it's not. I have friends on a joint income of £80k a year and 3 buy to let properties. How is right that they can keep it and we can't?

Child benefit should be universal. It is simple, and it is fair. Everyone is a child once, everyone gets child benefit.

The reason Child Benefit is paid by HMRC and not DWP is because it used to be a TAX ALLOWANCE. This was recognition that if you were supporting children, your salary had to stretch further, so you were allowed to keep a little more of it.

It was then changed to being a benefit. And this makes it easier to argue for scrapping it, saying someone on 50k 'doesn't need a handout'. Whereas in its inception it was an allowance to cover some of the costs of raising children who will hopefully contribute to GDP as they start to work.

The incompetent management of this policy is something else. Families on 99k keep it, families on 50k start to lose it. Husbands and wives no longer are able to keep their tax affairs confidential. Millions more people will have to fill in self assessment forms. People earning 50k+ are hit with a marginal tax rate of 70%+, when people earning 150k + have their tax rate reduced, because 50% is 'too high'.

Total mess, and wrong policy. Take it back to being a tax allowance, because that is a clearer way of seeing what child benefit is for - it is to allow you to keep a little more of your income while you have more people to support on it.

MerseyMama I am terrible at explaining things. I hope that somebody more articulate will take the trouble to answer your question. If they haven't by morning, I will try and compose a coherent reply since I really do think this is a crucial issue. I didn't want you to think that I was ignoring that question.

Thanks Shiny. I'm OK at my job, but completely at a loss when it comes to figures!

I still say 50k is a lot of money to earn in a year and that it is not needed regardless of if a single parent or couple.

Obviously it is wrong that a couple should get a higher threshold than a single person. Unless kitKatgirl is correct and it balances out due to tax.

I am not having a dig at anyone, I admire people who work hard and get on in life but ask yourself, Do I really need that extra £20 a week?

I also think they should means test all benefits including the winter payments the Government gives pensioners but hey thats another thread :)

and that child benefit is not needed

Panda

Lots of people earning £50k+ are saying they object that the dual income families on £49+£49k keep CB, whilst the single earner families on nearly half that lose out. It's illogical, that's the objection.

Sorry xposted

£50,000 i s £688 a week after tax assuming no student loan. £35 781.
Housing benefit if I claimed it would be £20,000. So if I did not work the state would give me £20k towards rent alone - so that leaves £15,871 net that I as a worker if I wer eon £50k a year would have . The benefits claimant with her family of 2 children what would she get as well as that massive sum in rent? CB, - some give me an idea, prescription charges, some kind of income support - let us assume her children are 3 so unlike the worker who out of her net £35k or net £15k after she's paid £20k to househerself also pays for child care so she can work the benefits claimant... basicallyh I am trying to work out if a £50ker in fact in terms of net pay is not that much better off than some benefits claimants. And those who think wow £50k forget is it £36 789 after tax, that that person also then pays rent or mortgage, prescription charges and travel costs and childcare costs.

It won't stop at this either. Once they've got away with this, how long before they decide that people on £50k a year don't 'need' free health care, schools, etc. Mark my words, this is the slippery slope. As William Beveridge said, "services for poor people are poor services" (or something along those lines anyway). Once people do not get these services any more they will become disenfranchised and wonder why anyone else should get them.

MerseyMama- How much do you think a family living on £50000/year actually get in their bank account every month?

Genuine question, as I feel that there is incomprehension on both sides.

I am also not having a go, but on your DH's earnings I would imagine that you are as a family rightly receiving a fair number of benefits to top your income up to a livable level (including housing help, council tax help etc...). People earning above £42,000/year don't get any of these things and pay a fair amount of tax too.

As a family our net monthly income is £2600. We pay for everything from that, including council tax, housing etc.... We are not badly off and we live very frugally but it is a struggle most of the time.

Panda

I know what you mean but alot of people look at it differently. For e.g they have high rent, cars, childcare, health care costs, commuting costs, pensions etc that take up their wages. We don't those have those costs and lifestyle so they use cb for their dc instead of their wages. We don't have wages or they are very limited so we need our cb for dc.
That is the best way of describing it, really its down to lifestyle choice.