To think ‘household income’ should be a tax option?

[MeteorGarden]

(Disclaimer- I’m actually not a parent but grew up in a low income family where this would have made a world of difference)

It’s discrimination at its most socially blatant. HMRC may as well be dipping their hands straight into the pockets of family units and taking hundreds of pounds every month.

**Imagine: Two identical families have an annual income of £24,000
Family A- Has one person working full time whilst the other other provides childcare to 3 small children.
Family B - Both parents work part time earning £12,000 each whilst tag teaming childcare.

At the end of the month A take home £1600 whilst B get £1900. For the EXACT same hours and EXACT same salary!

How much difference would £300 per month make to a struggling family? What does it matter to HMRC whether one person earns or both? If you’re cohabiting/ married and share children you’re functioning as a family unit which shouldn’t be discouraged or disregarded by the government.

Why are HMRC happy enough to count ‘household’ income if it means they can refuse a benefit claim but refuse to offset that by offering a tax break?

**Imagine: Two identical families have an annual income of £90,000

Same set up as above.

A bring home £5000 per month whilst B bring home £5600 per month. To add insult to injury family B also get child benefit 😂🙈 - I bet they need it, surely it’s hard to survive in £5600 a month!

My point is that regardless of your income level, family units who split work unevenly (for whatever multitude of reasons families face) are being pick pocketed by the government.

(Disclaimer - I’m not suggesting that ‘household taxation’ should be forced upon everyone, just those functioning financially as a family unit)

There's a tax break for being married. Maybe that's what ofsets this?

• also, I did put in my original post that I’m not suggesting it be forced upon everyone, simply made an option.

So those getting shirty about female independence please check yourselves and appreciate that currently women only have the option to be taxed indervidually and perhaps not ever woman thinks like yourselves

You want to be taxed indervidually, awesome, I don’t...that should also be supported.

Well if we can all chose our own tax treatment I’ll go for none at all thanks.

@grimbles

Probably, which would mean there is an even bigger loss for family A.

However, I don’t know enough about tax credits to include it so left it out.

Governments main role is to hoover as much tax as possible out of the population.

Whenever they mention 'fair' it actually means 'more'

It's individually.

FFS. The UK is the only OECD country to not offer an option for family taxation. It's hideously unfair.

Those of you who think it's OK for my family to be taxed at a higher rate, on the basis that my "choice" (what a word, but I'll use it since you seem to like it so much) is regressive for women-as-monothink-bloc -- NB the other countries offer families the CHOICE to be taxed as a group or as individuals.

We like choice, right?!

Well, staying at home is a luxury, and a long-term SAHP will, on average, cost the government more in case of a break up. So it is rational that the tax is also higher in this arrangement.

Children also have a tax free allowance, why not transfer that to the parents as well?

No way would I go for this. DP is taxed at 40%, no way should my income be taxed at 40% too just because he's got a really good job. In your system I'd be 7.3k worse off a year!

And you can't have a system where people can choose how much they get taxed, that's just not how it works. So you'd either have to have it apply to everyone or nobody.

Good luck in finding two part time jobs that allow tag-team parenting. I honestly think it’s completely hypothetical, it would be really hard to find complementary jobs.

The only people I know who have anything like that with minimal childcare costs work night shifts and weekends, so rarely have time together as a family. If they are better off by a few hundred quid a month, then I really don’t think they’ve beaten the tax system as they have lost out so much in other ways.

In Ireland we choose either way. You can opt for joint or sole assessment of your taxes. We get tax credits which can be transferred from one person to another. We pay 20% tax on our first 43.5k and 40% on everything after that.

Emojis that's great if it's a genuine freely chosen choice that you and your partner have made. But what about someone in a relationship with a controlling partner who forces them to pool the tax allowance, meaning she's less able to earn and save allowance nd escape the situation?

"The UK is the only OECD country to not offer an option for family taxation."

May I humbly ask what the source for this piece of information is? AFAIK the reality is very different. Italy does NOT offer an option for family taxation, for example

If families want to choose the model where one SAH and the other works that's their choice. But personally I wouldn't want the system to incentivise that because on a population level I don't believe it leads to the best outcomes.

Well, staying at home is a luxury, and a long-term SAHP will, on average, cost the government more in case of a break up. So it is rational that the tax is also higher in this arrangement.

No. In fact the contribution to the economy by unpaid carers is approximately £462 billion PA:

£119 billion in care for the elderly, ill, disabled and infirm (Carers UK)
£343 billion in informal childcare (ONS)

These figures are a couple years old. It will be more, now.

The government is also subsidising the childcare for families with parents in work.

No way do I agree with this Women fought for years for separate taxation and I would see any change to that as a backward step I have and hope to always supported my self

Op is saying that it should be available as a option. If you choose not to use that option it’s up to you.

Personally I want that as a option, similar to the USA (married filing jointly) you should be able to protect as much income from the government as you can.

Feminism was never an obligation - it was simply giving women a choice when there were none eg.
Female working in a bank in the 60's until early 70's (UK) had to resign on marriage? No choice there - that's what we fought for equality.
My choosing to work full time after childbirth was my decision and do not forget pensions etc.

Now

It is extremely unfair that a family on a six figure income should send their children to a state school and use the NHS without paying for it.

Erm, I am paying for it. Through income tax. I’m a net contributor to the tax system even when you take schooling/health care into account.

In fact the contribution to the economy by unpaid carers is approximately £462 billion
You are confusing assets and liabilities here.
If not for the SAHM parent staying at home, the family would have paid childcare costs on a commercial basis - creating additional work places, additional tax paid by childcare providers etc.

The household tax basis isn't unreasonable, other countries do it, we used to do it, I think in USA you can choose to be taxed separately or together.

However I would actually go the other way. At the moment we have a tax system that is individual based and a benefits system that is household based. I would change the benefits system to be individual based. So what people would be entitled to would be completely unaffected by any non-dependents they chose to share a household with.

The individual model is much simpler, and easier to make fair. Everyone pays tax/receives benefit based on their individual income. If they are able and willing to live with other people and share expenses, I think they should be able to keep the savings.

I think where I disagree with you is that you see the family household as a given, whereas I think that whether people choose to live together is sometimes affected by tax and benefits. (Well, more the latter.) I think the individual is a more fundamental economic unit than the family. It's also a much simpler building block, that's easier to set up a fair system for. (Although taking account of dependent children will throw a bit of complexity into the mix.)

John Major started this sloppy slope.

If not for the SAHM parent staying at home, the family would have paid childcare costs on a commercial basis - creating additional work places, additional tax paid by childcare providers etc.

Simply not true. If I am a low-paid worker, I will likely pay no tax and earn less than the gov't subsidised nursery assistant looking after my child - who likely also earns so little she (yes it will likely be a she) pays no tax.

Re Italy - their tax system allows deductions for unpaid or low-paid spouses, and children.

So what people would be entitled to would be completely unaffected by any non-dependents they chose to share a household with.
Let's take a scenario of one parent earning £100K and another £10K, four children. Who is then claiming welfare for the children? (in excess of £20K for one parent and £0 for the other parent?)

And you can't have a system where people can choose how much they get taxed, that's just not how it works. So you'd either have to have it apply to everyone or nobody.

Many, many countries have such a system.

1. File jointly or singly
2. If singly, deduct your personal allowance
3. If jointly, deduct personal allowances (even unpaid workers like SAHPs get them) and allowances for children and other dependents.
4. Pay tax on remainder

At the moment we have a tax system that is individual based and a benefits system that is household based.

Yes. It's ridiculously inconsistent!