DH and I going part time to deliberately reduce wages

[Bucketheadbucketbum]

Just working out the free childcare hours and actually DH and I will be muxh better off if we both dropped to 3- 4 day week to deliberately reduce our incomes. Would obviously be nice way to live too! Anyone else doing same? Seems mental but we've looked at it 100 times over and it's true!

[messybutfun]

Let’s take for example an NHS practitioner - I believe the highest contribution rate to the pension scheme is 14.5%. Which will reduce the salary significantly. At the same time, this could also result in an additional tax charge if the value of the annual pension increase went over £40k. That’s why it’s being increased to £60k.

If doctors are not willing to work more for less, why would anybody else. They are smarter than most.

[Ilikepinacoladass]

@AviMav

Couples may not pool all their income together but if you are living together. THE BILLS are pooled together because you surely are going 50/50 or you should be. Which is a save all round. Being a single parent you don't have that option... the rest of your point is completely irrelevant

Of course it's a save all round. It's always going to be cheaper to share a house / bills, as I say that's why students nearly always do! It's a luxury to afford a place to yourself in a way.

And no, a lot of couples don't go 50/50 on bills as it happens. For many reasons. It doesn't matter what the 'should do'. You can't really base a tax policy on this assumption.

[ThinkingMeat]

As for getting taxed individually or as a couple.. I'm not sure, but think individually makes more sense. What about if a woman earns a lot less than her partner, she'll end up getting taxed a shed load, under the assumption they are pooling their earnings together.. which often isn't true! I may be misunderstanding it.

Yes I think you are misunderstanding how it works. It doesn't work like that in the many countries that apply tax on a household basis. The individuals in the household still have separate allowances. In some cases they can choose to transfer some or all between them depending which country if they wish to but that's a choice. They are not forced to combine finances at all, there is no impact on financial independence at all. That's a false argument against removing the discrepancy. The difference is that a single person wouldn't be penalised and have the thresholds applied at half the household income level.

[ThinkingMeat]

It wouldn't affect the setup couples have at all. It would simply mean single people don't pay more on the same money.

[Ilikepinacoladass]

@ThinkingMeat

It wouldn't affect the setup couples have at all. It would simply mean single people don't pay more on the same money.

So people would get a tax break for being single?

[ThinkingMeat]

No. Not a "tax break". They'd get the same as couples do now. Currently they are being penalised and taxed more on the same household earnings. Would just be giving them the same "tax breaks" that couples get now.

[Ilikepinacoladass]

Do the people in the household have to be related / in a couple? To be honest I just think it makes sense that it's more expensive to live on your own, and not really the government's problem.

[Ilikepinacoladass]

It still sounds like you're assuming couples / households pool their income together / share the bills equally, which just isn't the case a lot of the time!

[ThinkingMeat]

Of course it would still be more expensive to live on your own! You'd still be covering everything yourself. If you have children covering all their childcare and expenses alone. That's fine and expected. Doesn't mean you should also be taxed more as well so have even less of the same earnings left after tax to meet those higher expenses!

In those systems which work just fine, obviously people in shared houses are classed as separate households for tax purposes. As are adult children living with parents etc. It's really not complicated to do at all, it's what is done in many countries because it's much fairer obviously, as the examples in the thread show.

[ThinkingMeat]

@Ilikepinacoladass

It still sounds like you're assuming couples / households pool their income together / share the bills equally, which just isn't the case a lot of the time!

Not at all. Addressed this point already in earlier response to you. It wouldn't change anything for couples at all or prevent them from keeping finances separate.

[Ilikepinacoladass]

@ThinkingMeat

Not at all. Addressed this point already in earlier response to you. It wouldn't change anything for couples at all or prevent them from keeping finances separate.

So if there was a woman living on her own, and then her boyfriend who earns a lot more than her moved in (making them a 'household'), would she then start getting taxed more than when she lived on her own?

What if she wasn't benefitting financially much from this guy moving in, if he wasn't paying 50% towards the bills etc and they weren't joining their spare money together.

Doesn't it seem a bit wrong that she'd be also losing out tax wise?

[stickystick]

@Ilikepinacoladass
In parts of Switzerland single people with dependant children (or elderly) living with them are taxed differently from single people without dependants and married/partnered co-habitants.

Say a married couple earn 60k and 40k respectively. Their combined income is taxed as if they both earned 50k.
A single mother with kids who earns 100k would also pay tax as if she earned 50k.

[Ilikepinacoladass]

And not really sure why it would only apply to couples? That's the bit that makes me think it's being assumed they are pooling money together?

Why would it not be applied to housemates, as they are also as likely as couples to be sharing the bills?

[AviMav]

@Ilikepinacoladass

It still sounds like you're assuming couples / households pool their income together / share the bills equally, which just isn't the case a lot of the time!

The majority of couples do split household bills if they live together. People who don't do this are in the minority. It's not the majority where one person pays all the bills and the other person lives practically free within the same household yet they date.

You shouldn't assume this is the norm/common.

[Ilikepinacoladass]

@stickystick

@Ilikepinacoladass
In parts of Switzerland single people with dependant children (or elderly) living with them are taxed differently from single people without dependants and married/partnered co-habitants.

Say a married couple earn 60k and 40k respectively. Their combined income is taxed as if they both earned 50k.
A single mother with kids who earns 100k would also pay tax as if she earned 50k.

That just seems unfair on the one in the couple that earns 40k? To be paying tax as is you are earning 50k? Not all couples pool their income together? So the one earning less might be paying more tax than their earning for an not making up so it in a shared pool of money.

[ThinkingMeat]

@stickystick

@Ilikepinacoladass
In parts of Switzerland single people with dependant children (or elderly) living with them are taxed differently from single people without dependants and married/partnered co-habitants.

Say a married couple earn 60k and 40k respectively. Their combined income is taxed as if they both earned 50k.
A single mother with kids who earns 100k would also pay tax as if she earned 50k.

Yes. Simple adjustment to HMRC tax codes to implement. Really not complicated. Most comparable countries do something along these lines. The UK is a huge outlier on this. It creates extremely negative impacts.

[Ilikepinacoladass]

@AviMav

The majority of couples do split household bills if they live together. People who don't do this are in the minority. It's not the majority where one person pays all the bills and the other person lives practically free within the same household yet they date.

You shouldn't assume this is the norm/common.

Not assuming it's the norm. But also not assuming a 50/50 split is the norm. Often if one partners earns a bit less they will pay a bit less towards bills etc.

[ThinkingMeat]

That just seems unfair on the one in the couple that earns 40k? To be paying tax as is you are earning 50k? Not all couples pool their income together?

They would not be. They'd be taxed exactly as they are currently, each in proportiom to their own earnings. Nothing changes for them. The adjustment is to the tax code of the single person so that they are not taxed a higher percentage on the same household income as the couple.

[AviMav]

@Ilikepinacoladass

Not assuming it's the norm. But also not assuming a 50/50 split is the norm. Often if one partners earns a bit less they will pay a bit less towards bills etc.

Oh sorry when I said 50/50 I was just making a point in reference to your comment you are still saving whether its 60/40 compared to a single person though. It's far cheaper.

Also you comment earlier about life being "a bit harder" if you have a child to someone who doesn't contribute. It's STILL not the same as having someone to go 60/40 with even if that person paid CM for their child because you are both running separate households.

You seem to be struggling to understand the point that you are saving even at a 60/40 split on bills as a couple.

[usernamealreadytaken]

@Dibblydoodahdah

@usernamealreadytaken ah so you are earning less than £60k so paying less than £16k tax and NI. OP and her DH are paying many times that amount. At least £70k of they both earn over £100k.

Nope, your maths is out. One earner under £40k, one well over. But obviously will both be maximising pension contributions very soon so we can get more free stuff which we’ve already paid for.

[Newmumatlast]

@7Worfs

The better option is to put the excess income in a pension through salary sacrifice if your company allows. Then it won’t count towards your income to get the free hours.

Agree with this especially given you've no idea how bad state support may be when old plus gov/employer will contribute towards contributions so you get extra benefit from doing jt

[ThinkingMeat]

Not assuming it's the norm. But also not assuming a 50/50 split is the norm. Often if one partners earns a bit less they will pay a bit less towards bills etc.

Suggested changes would have no impact om that whatsoever. Couples would have completely separate finances and tax allowances as now. Usually such systems allow transfer of allowances between them if they choose but not required. No impact on couples choosing to keep money separate or what they pay. None. It simply adjusts tax codes so single people aren't taxed more than them for the same household income. Like you say they are meeting all costs alone already, so more expensive of course, that will continue the same. They just won't be trying to do that with their income more heavily taxed on top before they even start paying all of those bills on their own from what is left after tax. Very simple, proved to work in many other countries, totally fair, easy to put in place, massively reduces inequality for women. Obvious thing to do.

[Dibblydoodahdah]

@usernamealreadytaken

We "lost" part of CB but as we fell in to a decent household income bracket, we forwent the full amount so those not earning as much could have it because they needed it more. It seems we were mugs to assume that those who could afford to support themselves should do so, and leave taxpayer money for those who actually need it.

So you both must be earning less than £60k otherwise you wouldn’t be entitled to child benefit at all.

Of course, you won’t tell us the actual figures because you’re paying far less tax than the OP and her DH and have zero reason to get on your high horse.

You reckon you’re net contributors but we’ve seen zero evidence of that. You won’t even confirm how many children you have or whether you’re using the free childcare hours!

[karmakameleon]

@ThinkingMeat

Not assuming it's the norm. But also not assuming a 50/50 split is the norm. Often if one partners earns a bit less they will pay a bit less towards bills etc.

Suggested changes would have no impact om that whatsoever. Couples would have completely separate finances and tax allowances as now. Usually such systems allow transfer of allowances between them if they choose but not required. No impact on couples choosing to keep money separate or what they pay. None. It simply adjusts tax codes so single people aren't taxed more than them for the same household income. Like you say they are meeting all costs alone already, so more expensive of course, that will continue the same. They just won't be trying to do that with their income more heavily taxed on top before they even start paying all of those bills on their own from what is left after tax. Very simple, proved to work in many other countries, totally fair, easy to put in place, massively reduces inequality for women. Obvious thing to do.

@ThinkingMeat

Please can you tell me which jurisdictions tax household income in this way? I’m aware of countries where personal allowances are transferable between couples but nowhere where a single person receives the same allowances as a couple.

[JaninaDuszejko]

So you both must be earning less than £60k otherwise you wouldn’t be entitled to child benefit at all.

Child benefit is based on taxable income not gross income. So you could earn £90K, put £40k into your pension and still get your full allowance of CB. If you are a parent and get childcare vouchers/tax free childcare or get any tax free benefit from work you could still get CB on an even higher salary.