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)

Services like vanity projects,bungs to housebuilders and wealthy pensioners so they keep voting for the status quo?

Quite happy for those to be cut.

On the other hand if it was for genuine infrastructure and social care, quite happy to pay more.

We should be allowed to state exactly what our taxes are spent on when we pay it. Without that option don't blame people for using every tool in the box to pay as little as possible.

And of course it should be an option for household income. More choice, not less.

Well then IMO they deserve the extra cash for choosing a MUCH harder option than one parent caring and one parent working.

Ah but maybe they wouldn’t have to if they could file jointly.

Haven’t read the whole thread but lol at the idea ‘you can’t let people choose how they are taxed!’

Yet self-employed people get exactly that - a choice to be sole trader, have a company vehicle, if a company, pay themselves salary or distribute dividends, etc etc. So much choice.

And yet they are still taxed, it’s not like choice means an option for no tax at all.

You should be able to choose on an annual basis between family or individual taxation. Family taxation should require both adults to submit a tax return declaring their willingness and intention to be taxed together, the absence of any such declaration would mean individual taxation would apply.

Of course PAYE would have to be operated on an individual basis and the lower taxation applied by virtue of a refund of taxation deducted through PAYE. However this best estimate / overpaying is not too dissimilar to the QIPs system for large corporates so it’s not as though HMRC has no experience of somewhat unreliable money in/out flow and needing to tally up after the final return is submitted.

We file jointly here (we do have a choice) in the USA. I’m definitely not a fan of the taxation system in general here as it is such a yearly headache, but it is really helpful when one of us has been a SAHP (DW and I have both been for 3 years each).

Between us we know a ton of SAHPs, and in general have found that “getting back in the workforce” here (West Coast - which I’m sure isn’t representative of the country as a whole!) really doesn’t seem to be the huge ballache I hear a lot about from friends back in the U.K. (barring a few professions, of course).

Bit of a tangent here, but I work in a preschool, and last year 60% of the SAHPs that did pick up/drop off were men. This year it’s about 50/50. I barely ever saw a dad at the nursery school gates when I was teaching in South London.

Finances are often managed jointly in families. It makes sense to file jointly if it will benefit the family in question. I don’t think this needs to be a feminist issue, and again, it’s choice that is key here.

Prior to 1990 when individual taxation was brought in, the principle was that a married woman's income formed part of the income of her husband and should be taxed as such.

After the change there was still a Married Couple's Allowance which defaulted to the husband. The wife could claim her 50% share of the allowance but if it was to be allocated entirely to the woman then both parties had to agree to the change. The MCA was gradually reduced until it was phased out entirely.

As PP have said, it's the government's task to extract as much tax as possible.

Personally, as an individual, I prefer to be taxed individually.

People who work have a whole set of extra costs; they may need to run an extra car or buy a travel card. They may need a pc, clothes, tools, buy lunches, pay for child care or wrap around care. Your ideal scenario is rarely the case for most people - in fact I've never met anyone who has that work pattern with their partner.
I bet someone has worked out what it typically costs to work and it's probably more than you think.

Or they may not (have additional costs), and frequently not to the extent that the tax saving / cost implies.

It should be possible to choose - individual or household - whatever works best for that unit.

The same unfairness applies to child benefit. A family with one salary of £60k receives no child benefit. But a family with two salaries of £49k (total £98k) receives full child benefit. It’s ridiculous and penalises families with SAHP.

I know some females that were not offered a work pension many years ago. I guess in an era when not as many women worked. Now companies have to offer a pension, but you have the option to not pay in if you choose. I like to have my own tax, it means that I can keep an eye on it and I am not linked to anyone else.

I think your example of two working parents is unrealistic. In reality there is likely to be at least some overlap in work schedules which creates (generally) increased costs (childcare), time poverty (i.e. the family has less time for household chores/admin, family time, exercise and leisure) and just generally has more stress in their day to day life (think juggling school runs, taking time off for sickness/medical appointments/school events, not being able to work late and having to be that bit more organised to fit everything in and managing school holidays). So, what all this means is that really having a SAHP (and living comfortably off one salary) is a bit of a luxury and luxuries tend to cost more.

We live in the US and file a joint return. DH earns more than me but I'm first named on our return. The system here is fair. You have 3 main filing options, single, married filing joint and head of household. The allowances for married filing joint and simply double the single allowances. Head of household is for single parents and they have much more generous allowances to reflect the higher costs they incur. Overall I like the system compared to the UK. You can be married and file individually or once you have DC you can file as head of household.

Why should someone’s choice to have children and be a sahp mean their family should pay less tax than others? That is very unfair and who would pay the difference? The budgets are already stretched for NHS, education etc

They wouldn’t pay less tax than other households with the same income, they’d pay the same. Generally spending happens at a household level more than an individual level.

Im jumping the thread massively - 4 working adults in this house plus one 6th former with a job.

Exactly why do you think I should know anything about anyone elses salaries ?

A better option would be means tested contributions for families who choose to use the welfare state. 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

Are you serious? They don't pay for it? Do you propose that they get a refund of their tax and ni contributions if they go private? Sheesh.

So 2 people doing the same job, for the same wage, both with same amount of kids.
1 is single and pays for childcare and gets one tax allowance.
1 is married, has a partner who stays at home, no child care costs, 2 tax allowances.
Not exactly fair.

But it's the high earners who are 'paying for it.

You have to have an above average income before you become a net contributor (can't remember the figures but it's somewhere around £40-60k).

Below that level, your 'share' of tax that funds the NHS, schools, emergency services, roads, government, etc etc etc is (quite rightly, progressive taxation being the fairest way) subsidised by the high earners, who ironically, often use less because they are more likely to use private schools and hospitals.

A better option would be means tested contributions for families who choose to use the welfare state. 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

Ok that’s fine as long as that person gets a tax refund on those services.

I'm struggling to see how family B would get tax credits but family A wouldn't in the OP scenario since both families have the same income and no childcare costs. I've never been in a position to not need to work and a lone parent now so not sure how SAHP scenarios work with TC.

newyear only 2 people who are married can file as household here in the US. The other 2 persons would file as single if they were not married.

I agree op. I can’t work but can’t claim ESA due to my dh income. I would love to transfer my full tax allowance to him but I can’t. The government wants it both ways.
For what it’s worth feminist hsve destroyed any choice women had to be a sahm unless their dh earns a good income.
Single taxation lowers family incomes, also the rise of dual income household have pushed house prices up.

I was going to say ItalianPoster, France has much higher childcare subsidies than we do. That probably has something to do with the rates of French women working.

I do think that as we're one of the few high income countries where it's not possible to deduct for dependants, it's worth thinking about whether we could benefit from that model. But you just know that if we did get the household income option, it wouldn't be alongside any cheaper childcare and it would force women out of the workplace. Far too often we seem to get the worst of all worlds.

^
Im jumping the thread massively - 4 working adults in this house plus one 6th former with a job.^

Exactly why do you think I should know anything about anyone elses salaries ?

No one is saying you should be forced to file jointly. Just saying it should be an option for married people to file together.

Someone said family 2 has to pay more childcare but they are over simplifying it. In my situation we both work so have to pay childcare but our ratings are uneven meaning we pay more tax and we don’t get child benefit.

Agree with everything the op says. Have seen this debate a few times. It always turns into working versus none working mothers. It isn’t just about that.

Do you propose that they get a refund of their tax and ni contributions if they go private?
Allowing for a tax rebate for the government per child school spend (is it around 5K?) if the child goes private, possibly with an upper cap on the parents' earnings for eligibility, will actually do a lot of good, in my opinion. There are countries where education and medical expenses are tax deductible to a certain extent.