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!

@JaninaDuszejko I am well aware of that thank you. I utilised additional pension payments myself. The poster claimed that she was entitled to child benefit but chose not to claim it. If she was entitled because she was putting additonal amounts into her pension than she has absolutely no right to criticise the OP.

Mechanics work differently in different countries but overall effect is generally to aim to achieve equity so that households with the same income pay the same level of tax. Some make extra allowances for people with children.

Some examples:

In France tax allowances are per household. Each adult counts as one unit. First two children also count as half a unit and further children one unit. Tax rate therefore determined by size of household. Adjustments also made for disabled dependents, divorced couples etc to reflect higher costs they will have.

Denmark there are additional allowances for single people to ensure they aren't penalised and paying more on the same income. Tax allowances also optionally fully transferrable between spouses so couples with different earning ratios can be treated fairly on the same total income.

Austria, Ireland, Spain all provide additional tax allowances for single parents. Some adjust the actual tax brackets instead of allowances depending on household composition, but same aim and effect.

Also research shows that countries that combine (generous) universal benefits with supplementary family benefits towards single parents – based on their status as single parents not their income – have the best results in terms of reducing poverty (Denmark, Finland and Norway).
Reference: Morissens, A. (2018), “The role of universal and targeted family benefits”, in Nieuwenhuis, R. and L. Maldonado (eds.), The Triple Bind of Single-parent Families, Policy Press, Bristol.

So yes, UK is an outlier to do so little. And research proves the UK approach depending entirely on benefits based on means testing instead of universal benefits and tax adjustments for single parents increases poverty.

Italy and Portugal don't adjust the tax but provide higher levels of family allowances for single parents: all, not means tested.

Most European countries seem to have realised means testing costs more than it saves and has worse outcomes. Not the UK though.

Greece, Slovakia, Czech Republic offer more parental leave for single parents.

Research shows participation in the Labour market is the biggest reducer of poverty therefore universal additional benefits for single parents plus tax adjustments are the most effective approach. Also, for the same reason, that the countries with the best outcomes for single parents and their children tend to be those with affordable childcare in place for all parents, not means tested. True also for couples with children.

UK approach is expensive, inefficient and counterproductive because it creates poverty traps.

Some obviously do it better than others. But most do a better job than UK. French system is probably most equitable for all households in terms of income tax fairness. Although there do seem to be adminsitrative issues in terms of transferring state pensions to widowed spouses. Mind you, in the UK you cannot do that at all!

Easy to design a system that takes the best bits of tried and tested methods from other countries proved to be effective already and apply it to UK tax code. As I said, you simply leave couples as they are, but add an optiom to transfer tax any amount of allowance between them if they choose and adjust tax codes for single parents to give same allowances per household. Plus remove pointless means testing for child benefit and childcare for everyone. This would increase single parents working, reduce benefit claims, reduce child poverty, decrease gender pay gap, reduce pensions gap for women, increase productivity. Evidence is all there. Only reason it isn't done is prejudice.

Removing means testing for child benefit and childcare costs no more than means testing because of admin and on top would then raise more tax revenue from two parent families as well as single parent families because so many people will work more. More than pays for itself by removing that barrier, win win for everyone. Shame we have no politicians with vision or a grip on economics.

They prefer to be able to say they're not giving to the rich, rather than make the arguments about both the costs of means testing and the impacts of disincentivising additional work/earnings.

True. Idiots.

And idiot voters for not challenging this. Politicians will treat people like idiots if they continue to shout to be treated that way and don't say "why would you do that? That will make us all worse off?"

In the UK people would rather shout at each other about how this person doesn't deserve this or that, instead of look at the evidence of what works and makes everyone better off and a happier society.

Behave like idiots, get idiot Government with idiot policies.

People can choose to tell their MPs to change this and make policies proved to work elsewhere and make everyone including them better off. They don't so they will get to make people they don't approve of poorer as they wish and continue to make themselves poorer at the same time by having expensive policies that don't work.

It's an attempt, with child benefit in particular, to continually decrease the number of people eligible and thus erode support for the idea of it. Hence they've not looked at the threshold in the 10 years since it was introduced.

Meanwhile, according to the Bank of England inflation calculator, the goods and services that £50,000 purchased in 2013 would've cost £64,170 in January 2023. I appreciate that the 2022-3 inflation wasn't in anyone's plan, but even in 2021 that figure was £56,610.

Mine are adults. IIRC we had 15 hours at age 3&4, but nursery charged top ups as it didn't cover the full cost. Worked p/t around that, and only had them in when I was working.

That's very much the intention. I think the childcare threshold is static too (not certain)

But some of the people who were originally saying "£50k is a fortune, nobody earning that needs CB" are going to find at some point that they, or their children, are ineligible for a once universal benefit while working in very normal jobs. Experienced Scottish classroom teachers will probably hit it within a couple of years, for example.

It's an attempt, with child benefit in particular, to continually decrease the number of people eligible and thus erode support for the idea of it. Hence they've not looked at the threshold in the 10 years since it was introduced.

Yes. Inevitable effect of means testing anything: inefficient, eligibility will be gradually reduced, and generosity if eligible. As well as being expensive. Universal models works: everyone pays for services, higher earners pay the most but everyone can access. Therefore wide public support for well funded services because everyone uses them. Same for health, education, early years. Means testinf costs more than it saves and undermines the service in the end. Most countries now realise this. Public goods are for everyone.

In Belgium all tax thresholds are uprated by inflation annually by law. UK would benefit from this, that Parliament had to discuss and vote not to do that automatically otherwise it will happen. Recent freezing of tax thresholds is equivalent to 4p extra on income tax rates over the next few years yet many people in the UK so silly they don't understand fiscal drag and will believe Government saying it has not raised income tax. Madness.

People in the UK need to wake up and demand evidence based policies that work. International data shows what works. Based on the comments in this thread, people in the UK do not want that because they see any change that might help someone else as "but what about meeeeeee?" even if overall it would mean more tax revenue and better services for them and more scope for tax cuts for them because less reliance on welfare.

Short sighted people get short sighted politicians. People who want to pay less tax should support more help to single parents because the "tax breaks" as someone put it will cost less than providing the welfare etc needed without them. People who are earning low incomes should support universal benefits and services for everyone because then higher earners will support those being funded properly. They should support removing disincentives to work more on higher incomes then there is more tax money to support them. Seems obvious.

People seem to be very stupid. Not sure why that is generally more the case in the UK than elsewhere? In many countries people would challenge their politicians not just because the system is unfair but also because it does not work, and actually makes them all worse off. Why do people want that? I find it very odd but must be a quirk of UK mentality, to not look at the big picture? Productivity stats for this decade and more show it's not going so well to take that view.

@usernamealreadytaken mine also only got 15 hours. The 30 hours was introduced whilst they were at nursery but the nursery didn’t accept them and still doesn’t. However, I wouldn’t begrudge anyone getting reduced nursery fees, no matter how much they earn. It’s an absolute disgrace that childcare costs in the UK are the highest in the developed world. €70-150 PER MONTH in Germany. We need all the highly skilled people we can get in this country. We need reasonably priced childcare to be competitive with other countries.

Changes I suggested also mean far fewer single parent families reliant on UC. Subjected to their own extreme effective tax rates in the UK and penalised at 67% for working more. Again very silly. Much cheaper to adjust their tax allowance so they can keep far more of what they earn each hour than to pay huge costs to means test them for benefits and then pay more huge costs to claim them back through complicated systems when they work. Could just about understand argument a few years ago that this created many jobs for people to administer this at DWP and HMRC and job centres and tribunals and for lawyers and in charities to deal with unintended effects. Joking obviously. Just referring to how much money is wasted in this way. Now UK has a labour shortage. All those people can go and do productive jobs if you just give universal childcare and benefits for children to all people with children, tax single parents the same as other households with same income, and let them work without being "shafted" for it, I think is the word.

Then single parents and their children in less poverty and working more, less to pay in welfare, lower state cost, long term fewer people dependent on state support (this persists with women in UK disincentivised to work or single parents through even to old age needing pension top ups), more people paying more tax, and then also scope for taxes to be lower for same or better outcomes.

In UK's case probably better to reinvest the savings from this system in better public services because they are so bad, because again that will mean more tax revenue if there is good state education and healthcare. More skilled people earning more, fewer sick people who can't work. More tax revenue. Then maybe look at tax cuts.

But it has to start somewhere, with a less "me, me, me!!!" view and looking at evidence and pushing for what is fairer but also works, to get the positive effect even if the initial policy won't help you personally. It won't make you any worse off, it will benefit some others more for a short time then that money will feed back into you as better public services, better support for disabled who cannot work, lower taxes for higher earners because people are not trapped in a system where they cannot help themselves by working more because they will be penalised so much whether they are claiming UC, earning £50k and stuck because of higher rate tax and taking child benefit away, or earning £100k and stuck because they will be taxed 62% plus childcare take away so actually over 100% as people have said.

Such a silly system. I really do not understand. Seems to be supported because everyone resents everyone else instead of realising when each other have a chance to do well then society does well and you get the benefit too. UK seems to want to be in a downwards spiral of jealousy and grabbing and many don't care that this ruins many lives compared to a fair system as examples in this thread show, or even care that it makes them poorer too.

I find it very confusing! I do not understand why people would not support things that are proved to work. Remove tax barriers, make services and childcare/ child allowances universal, give the sjngle parents the same tax as other households and then it will get better for everyone very quickly, would have a pretty much instant effect, just a few months and people would change what theydo because they would have opportunities to pay more in for everyone and earn more for their family. Very interested to hear why people in the UK do not want this.

Definitely in support of more help / benefits for single parents. Especially as we are facing population decline in the UK. I read an interesting piece that suggested making life easier for single parents can help reverse this.

I guess in terms of giving single people the same tax allowances as if they were a couple just doesn't sit right with me as it seems to be treating single people as if they are one half of a couple / that being a couple is the 'norm'.

Also don't totally understand what the system being suggested is, but think we need to be careful about not making people vulnerable to financial abuse, which I think taxing people based on joint income rather than separately could lend itself to.

(giving single people the same tax allowances as if they were a couple just doesn't sit right with me as it seems to be treating single people as if they are one half of a couple / that being a couple is the 'norm'.*

I feel the same and raises the issue of how proof of being a single parent would be obtained - something tells me the number would rise exponentially. Universal childcare and child benefit is definitely something I can get behind.

An alternative is having tax allowances for children too - so a single parent wouldn't have the allowance of a couple, but they would have an additional allowance to reflect the household composition.

So many clever posters on this thread, it’s actually being a joy to read some of the breakdowns of policy.

Don’t children already have tax allowances? It would make sense if those could be transferred to single parents. There’d still be the issue of identifying single parent households, though. I guess one way would be via council tax discounts.

You mean the personal allowance?

No, it wouldn't. I did explain. Couples choosing to combine finances (example one worker and one parent at home) could choose to transfer non-working person's allowance to the worker. As they see fit. But opt-in, so nobody forced to combine finances. Either could revoke with a simple form online even if they did combine, so total autonomy. Lower earner in a couple if decide not to transfer allowances would be taxed exactly as they are now. No impact on couples at all except the added benefit that as in Denmark currently if they wanted to transfer allowance between them they could. Whether they did or not, their total allowance for the household would remain as now. No disadvantage to anybody in a couple. Some optional increased benefits. But no problem with keeping finances separate if chosen. The argument to disadvantage single parents to protect "financial independence" of women in couples is so obviously false, not necessary. I question the motives to make this argument as clearly that is not part of the change being discussed at all.

It would just be adjusting tax %s applied to single parents - so not changing the tax arrangements of couples - they would not be taxed a higher % on the same household income, taxed just as they are now. As you said before a single person will obviously have higher outgoings per person because they pay for a whole household and bills alone. That is fine and expected. What they should not be having is also being taxed more on the same income so they have less net pay to start with from the same household earnings, then trying to pay all of those double expenses (that a couple will split in some way) from a lower amount of after tax pay than the couple can keep when the couple earns the same amount. That "double whammy" makes it almost impossible to do successfully. Hence the high amount of poverty and lower outcomes for those households. Is this what we want, to make those households so poor they rely on welfare long term or can't work more or end up with poor health etc.?

You compound that problem if eligibility for things like child benefit or childcare are also based on a single income not household income. So "triple whammy". If they must be means tested then household income would be much fairer, but as explained before cheaper and better outcomes not to means test these for any family regardless of couple/ single. It costs more money and you then spend money on funding staff at DWP and HMRC instead of giving the money to children. Makes no sense.

Why would people want to charge a household more tax for the same income if it is already at a disadvantage of having only one parent and less adult time to split between earning or looking after the children? Couples who both work get twice the tax free allowances, can earn twice as much before they pay higher rate tax or lose their personal allowance, yet still can share childcare between them even if both working full time. To tax a single parent the same as them on the same household income still gives them a big advantage, just would avoid "stamping down" on the single parent even more on top of the inbuilt disadvantage.

In some couples where one works and one not, allowing the transfer of tax allowances if they wish would put them in the same position as those who both work and respect that it's up to families to make this decision, from the outside it should be identical: same household incomes attract the same tax. Then single parent should get the same allowances as the couple however they split them (or choose to keep them separate!), so that the same household income means the same amount of tax. It really isn't complicated and it is so obviously much fairer, I do not understand why anybody would have an issue. The single parent doesn't have the benefit that couple with one who works and one not working has, of one parent at home full time so no childcare cost, so will still be worse off. Don't worry no single parents will suddenly be getting an advantage over others! The two working parent family still has an advantage with two people to earn more, two people to share childcare. The couple with one worker has a worker who can work without restrictions on time due to childcare and no childcare cost. And both get to split costs as they wish when the single parent will pay alone. Because as you say of course living alone it costs more, and this is fine. But that cost should hit once, not three times compounded and then taxed more as well for the same household income! That is absolute madness. I don't see how any rational person could think that is fair. Or crazy to suggest households be charged the same on the same income no matter what their setup. It's not a "tax break" as somebody said, just basic fairness.

If we want these families of single paremts to be able to provide better for themselves, have better outcomes, need less welfare, then why would people not give them a chance to do that and "level the playing field" to get rid of the poverty traps shown in so much research on the UK system. It will still be much more expensive for them and always will be but insane to also penalise them through higher % tax on top, then people complain many don't work/ work enough. UK system seems designed to make that not possible for them. Will never be the same as having two adults and will always cost more and that is understood but why design a tax system to make another level of disadvantage on top?

Easy fix that many countries do. Have explained the different approaches and what has been shown to work. Won't impact you if in a couple except over time there will be more tax revenue so you will get better public services or lower taxes. Or maybe UK Government will spend it all on broken PPE or moats or something but in any case single parents and their children would have better lives at no cost to you.

Yes.

Yes.

Go for it. Your children will benefit from you being around more, and the fact that you're likely to have a better work/life balance.
Going PT because of kids WILL affect your career though, generations of women are proof of that, but you may feel it's still worth it.

Not difficult. UK makes such analyses already for many benefits. Also Council tax as you say. Many other countries do it, it isn't difficult. HMRC have addresses for all registered taxpayers, they know how many adults at each address and easy to identify fraud. Houses of HMO are registered so occupants would be considered separate. Tick a box on HMRC website for adult child living at home so they get a separate allowance.

Systems to "police" this would be far less expensive than means testing child benefit and childcare and welfare and then claiming back welfare overpaid and sanctioning and appeals for that and on and on.

It sounds like excuses. "It can't be done, too hard". It can, easily. It is, in many countries. It's not hard. It would cost much less than the UK system now and have better outcomes. Research shows this clearly because it has been done already elsewhere.

That makes complete sense @ThinkingMeat. You’ve made such persuasive arguments that you’ve changed my mind. I entirely approve of single parents using their children’s personal allowances.