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 The maximum housing benefit for a 2 bedroomed house in the town where I live is £85 per week. If you choose to live in a bigger house, (unless you have lots of children) you pay the difference, so where do you get the figure of 20k housing benefit from. The councils will only pay so much towards rent regardless of how many children you have.

As I said upthread, a family of 5 on £50k a year are in the 5th income decile according to the Institute for Fiscal Studies income calculator. That means that 50% of households are better off than this family on £50k.

I agree with what a lot of other people have said - fair enough to only give benefits like child benefit (and winter fuel payments) only to people below a certain income, but it would be good if that was actually the household income, not the income of individuals in the household.

where families choose to have one parent staying at home, isn't that a luxury that most people can't afford?

Mandy, it's really not always a choice. I can't afford to work, and won't be able to until DD is at school, because even if I could find a job, it wouldn't cover childcare costs, and we've no family locally. I've been unemployed since March last year; no redundancy because I was on a contract, couldn't find a job, no JSA after the first six months because DH earns just over the threshold, no maternity pay because I got pregnant just too long after losing my job. And yes, I chose to have DD (having tried for four years, I couldn't face giving that up), and fortunately we can get by. But I am amazed at some of the complaints here. I entirely agree that the dual/single income thing is appallingly unfair. But we get by, in the south-east, on less than half the £50K people are saying isn't enough. I just wish I could afford to put the CB away for DD as people keep telling me I should!

I still have no idea how separated parents are treated. If the children's father earns £100k, but doesn't live with their mother, who earns £40k, does she get child benefit or not? What happens if she meets a new man and they start living together and he earns £60k? They aren't even his children! And maybe he had a child with his ex and she earns £35k but since the father earns £60k she loses her CB too even though he doesn't live with her.....

I have just done this thingie and it tells me that 34% of the population live on less than us.

morethan Benefits are supposed to be a safety net for those who find themselves in difficult circumstances not to be used as extra money to fund lifestyle choices.

I see your point but if they have high rent then move to somewhere more affordable and within your means. Childcare, yes I agree, ridiculous prices and that should be looked at. Commuting, well my ex has to commute and he is on minimum wage so don't see why child benefit should help towards that. And we would all love to have a good pension but again child benefit is for the child, not to ensure we have a pension.

boggle - I love the way that having a private pension is described as a -lifestyle choice.

DH and I pay a fair whack of our incomes in to our private pensions. The reason being thAt we work on the basis that pensions will probably be means tested or phased out in the future and therefore it's a responsible thing to do. Once again we'll subsidise those who can't or won't make their own savings for retirement.

Actually, sometimes I think we should just fuck it. Piss all of our money up the wall and then stand their with our hands out.

Peppa - only the income of the parent the child lives with counts or their partner It doesn't matter how much their other parent earns. Not fair at all but that's how they're doing it.

I believe that if you person earns 50K, they pay 8K more tax than two people earning 25K each (think it was in MN so must be true), due to the personal allowance and not paying the 40% rate.

If they are going to take it away make it simple and fair. Cap it at 2 children maximum but keep it universal.

Of if you they are going backwards and taxing women with their husbands then go all the way and allow husbands (and wives) to use the SAHPs Personal Allowance.

I'm actually quite looking forward to the fall out when the whole thing goes tits up, which it will. It can't fail to. Look at tax credits - under payments, over payments, what a bloody nightmare. George Osborne should be made to foot the bill out of his own pocket when it becomes clear to all how expensive it will end up becoming. The more I think about it, the more I realise what an impossible task this will be to police and monitor. It is a complete joke. Look forward to watching them squirm.

Wow that adjusted net income thing looks very complicated or am I just being thick and sleep deprived! So is it £50,000 a year net income rather than gross? Ie. after tax, pension and child are vouchers have come off?

shiny, in fairness you won't because private pension funds aren't going to be handing out money to people who haven't contributed to them. The only thing those without pension funds will get is state pension- which is barely enough to live on at the moment and I can't imagine will improve.

Peppa - if the man on 100k is the one claiming CB then he will lose it, if his estranged spouse on 40k does then she won't. But yes she will if she then moves in with 60k boyfriend.

I have a very basic objection to this. Child benefit was originally conceived as a universal benefit to the mother, regardless of the wage or wealth of her partner. This meant that all women, even those in controlling relationship situations, could access some money to help feed/clothe their children.

'Labour's Barbara Castle was responsible for a Child Benefit Bill, which was enacted in 1975. The bill replaced family allowance with a benefit for each child, which Castle insisted was paid to the mothers. The act was not implemented immediately because of the economic crisis of the mid-1970s. Replacing tax allowance, child benefit was finally put into force.'

link to national archive

Once we start looking at the family's finances before providing benefit we lose yet another lifeline for thousands of women. Added to all the other incremental attacks on ordinary women's financial independence over the last couple of years this is starting to seem like policy.

I would like to understand the implications if any for ni/pension
I would like to know timescale on implementation
I would like to know how it will be implemented eg do I need to fill in a form
I would like to know why it is seen as politically acceptable to take money from babies and children but not from pensioners at the same end of financial income.

Feel I might have been slightly harsh on the threshold, not too sure as I live oop North and it is obviously cheaper to live here than down South.

I still think most families should be able to manage well off 50k but it has to be fair, why should a single person lose out and like pepperpigpants asks what happens in the case of separations, step families etc?

No Pie the adjusted net means net of pension (and some other bits), not net of tax. Nice and easy to understand, isn't it!!

Duchesse- no you only get housing benefit and council tax benefit if you earn below 17000 where I live. I appreciate that you pay a lot of tax on £50k but no where near enough to make it feel like living in 21k minus tax.
Also can't remember who said someone who earns 50k plus must have worked very hard and got student loans etc so did my dh he has a masters he earns 21k because there are no jobs.

We do get tax credits though

Panda

I'm totally with you and believe me struggled with this for a long time.
But reading threads on here, its just how some people choose to live and justify their lifestyle. Its the same as the argument about income. Somebody earning 15k but spending 13k on childcare can believe they only earn 2k.

duchesse - my point is this. By the time DH and I retire, the state pension will be either entirely phased out apart from only to those in the most dire straits or means tested. This has to be the case as the deficit is huge.

Therefore, DH and I are paying in to our private pension so that we will have income to retire on. However, due to this income, we're unlikely to receive a state pension. Therefore, by making the lifestyle choice to save privately for retirement, we're actually reducing our chances of receiving any state pension and once again subsidising others. Those who can't, I don't have an issue with. Although there are various levels of "can't" and some are more deserving than others. Those who "won't", I do have an issue with.

I'm quite aware of how private pensions work though so rest assured that I'm not under the ridiculous delusion that my private pension will be distributed to some random who has never paid in to the fund

However, I strongly object to private pension contributions being described as a lifestyle choice similar to wintering in barbados every year. It is not and, again, those who chose to do make private contributions as responsible people will once again probably be subsidising (by way of the inevitable phasing out of the state pension) those who can't or won't save

Thanks tincle, no mention of if child care vouchers salary sacrifice is included or not (or did I miss that bit!)

Merseymama - it was me who said that, I know, from my own experience that a degree doesn't always mean a good paying job, the point I'm making is in general to reach 50K you have to work very hard, companies will not pay that sort of salary for nothing. In a lot of professions such as nursing you will probably never have that salary no matter how hard you work (but that's another thread entirely).

Instead of penalising SAHPs maybe they should start looking at affordable childcare so SAHPs who want to work actually can. I have always thought the school day should be extended with 3-5pm being for homework and sports/music clubs, breakfast clubs in the morning and quality holiday clubs. And affordable care for the under 5s as well.

Having been on benefits and a single parent I am able to give you a breakdown of what you actually get in my area for a single person with two children

£108 child tax credit per week
£70 Income support per week
£35 Child benefit
£85 Housing Benefit

Equalling £298 per week

£15496 per year.

Not 20k plus just for housing.