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!

[StatisticallyChallenged]

Yes, for clarity I meant an allowance which the parents would be able to use against their income. So a single adult has a personal allowance, a couple has 2x adult personal allowance, a single parent with 2 kids has 1x adult and 2x child personal allowances.

All of these should be transferable within the family so a family with two parents earning 40k each can in theory pay the same tax as a family with one parent earning 80k and the other staying at home.

[Blossomtoes]

a couple has 2x adult personal allowance, a single parent with 2 kids has 1x adult and 2x child personal allowances.

So a single parent would be better off than a couple - currently children’s personal allowances are the same as adults’. I can’t see that flying at the ballot box.

[Ilikepinacoladass]

Single parents aren't always sole parents though, if the single parent was getting additional tax benefits and then also sharing child costs with the non resident parent / getting decent child support, couples might see that as unfair?

[StatisticallyChallenged]

@Blossomtoes

a couple has 2x adult personal allowance, a single parent with 2 kids has 1x adult and 2x child personal allowances.

So a single parent would be better off than a couple - currently children’s personal allowances are the same as adults’. I can’t see that flying at the ballot box.

There's no reason they'd have to be the same - if you were doing such a big rethink as any of the options discussed you would obviously assess what was the correct value too. So it could be that the child personal allowance is 1/2 of an adults, for example.

[StatisticallyChallenged]

@Ilikepinacoladass

Single parents aren't always sole parents though, if the single parent was getting additional tax benefits and then also sharing child costs with the non resident parent / getting decent child support, couples might see that as unfair?

It's what already happens with benefits. Maintenance is ignored. Assume it's also the case for child benefit and childcare 100k threshold actually, as maintenence isn't taxable income AFAIK.

[ThinkingMeat]

@Blossomtoes

a couple has 2x adult personal allowance, a single parent with 2 kids has 1x adult and 2x child personal allowances.

So a single parent would be better off than a couple - currently children’s personal allowances are the same as adults’. I can’t see that flying at the ballot box.

Children do not earn money, unless they are a Hollywood star or something. There is no reduction to parents' tax bill in the UK for having children, no allowance applied.

Agree to do so would muddy the waters and also probably be quite unfair to childfree people who already pay towards schools etc. Obviously this benefits them too in longer terms but this might be too much to propose, I agree.

What I suggested is much simpler and less controversial, taking the best parts from systems elsewhere that could be applied to existing UK system easily without much extra costs, and based on research on long term outcomes of the other systems and what has worked.

A) Make child benefit and childcare funding universal for all households
B) Make tax allowances/ threshold allowances transferrable between couples on an opt in basis
C) Give single parents the same allowances as the couple for all thresholds.

This is simple, can be done overnight, saves a lot of money in admin, reduces poverty and need for welfare and increases tax revenue. And nobody will lose money from the "status quo".

Then watch the work rates and tax revenue increase and decide what to spend it on. Maybe also get some better politicians so it is spent on something good.

[Blossomtoes]

@StatisticallyChallenged

There's no reason they'd have to be the same - if you were doing such a big rethink as any of the options discussed you would obviously assess what was the correct value too. So it could be that the child personal allowance is 1/2 of an adults, for example.

Yes, that makes sense.

[StatisticallyChallenged]

Other countries do recognise children in their parent's tax - it's a way of recognising the additional costs and allowing parents to keep more of their income. The general idea is that it replaces certain benefits and removes some families from means tested benefits. Not all families , but some

So you wouldn't have child benefit at all. For those on means tested benefits it's rolled in there by increasing child elements. For everyone else it's part of tax allowance. No child benefit admin at all. Thousands of working families who are currently claiming UC no longer do so, because you're no longer taking their money via tax only to hand it back via benefits.

Childcare is challenging because the amount the govt is willing to pay doesn't cover what it costs to provide it. So free childcare might mean no childcare - but it should be heavily subsidised but done so simply and directly with the provider, not via a dogs dinner of benefits and claims.

But there are many improvements available and the main point is that the current system sucks.

[ThinkingMeat]

@Ilikepinacoladass

Single parents aren't always sole parents though, if the single parent was getting additional tax benefits and then also sharing child costs with the non resident parent / getting decent child support, couples might see that as unfair?

Obviously when saying "universal" for child benefit and childcare funds I don't mean a separated couple could both claim it, only one just as now.

In terms of the tax, yes the two separated parents should get allowances as two separate households, for all of the reasons I explained already. They each have a household to fund so will have higher costs. That is "a feature not a bug". But each household will have only one person's time each day to earn to pay for that house or be with their children. It will be much harder for them to reach the same household income as a couple living together. So you don't compound the fact that their household income will be lower while trying to pay all the costs for the home on their own, by also taking them a higher % on the same household income that they have earned on their own as one person not two (while usually also needing to pay much more childcare as well!).

They will not be getting an advantage on you. They will always be at a disadvantage. As someone said (I think you?) of course it costs more to live separately and always will. Fine. But you don't have to "stamp down" on them too and then tax them more as well on the same income even though they obviously can earn less in half the time available each day. That is just crazy, which is why other countries have provisions in their tax systems to avoid increasing the disadvantage by penalising through tax like this on top of the inevitable inbuilt disadvantage that will always be there just through practical reality.

These people will never be in a better situation that a couple who can both earn, or one earn and one not so have no childcare to pay, or share it all as they see fit. Never. Of course not. Will always be poorer as they have to pay alone. Why would you tax them more on the same earnings and well?

It really is a very peculiar thing to the UK to see this kind of argument where people would be worried that a single parent might be better off than they are and should pay for a house alone but from less net income for the same earnings because otherwise it might be unfair on a family with two adults to earn or be with children, if the couple didn't also get to keep more of the same household income. Effectively you are saying you want single parent households doing the job of two parents to subsidise couples who have the same household income. That can never be ok, if you step back and be rational.

And as I have tried to explain, this "but it's mot fair to meeeeee" attitude makes everyone poorer in the end. You object to what I proposed even though it would not
make you a penny poorer because you feel it might help a household at a disadvantage to you and that would not be "fair" in your opinion. Even though all research shows that in the long term if this happened then it would make your household richer also: it would increase tax revenue and reduce the need for welfare so either mean better pubic services for your family or lower taxes for your family. But you couldn't bear to see some people in a worse situation get what you consider to be "help" (when actually it's just removing existing unfairness) even if it actually benefitted you as well in the long run.

That is what is wrong with the UK.

This whole thread shows the same thing, around the tax thresholds and making it pointless for people to work more, as well as the single parent issue.

People will reap what they sew. Tried to persuade people with facts and research but if UK mentality is that you would rather things don't get better for others and for you in case you feel they might benefit more than you then I can see how you have ended up where you are. And what will happen in the next ten years: it won't be good.

[ThinkingMeat]

@Blossomtoes

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.

I am glad you have read and thought about it. I know it takes a lot for people to reconsider their views.

Children do not get an allowance in the UK system though. This is why the tax codes for single parents need adjusting as there is no asjustment made for the fact there is only one adult in the household to earn or look after the children (or pay for that while they do), and no allowance either for having dependents.

A couple with no children will pay less tax than a parent for four children on the same earnings.

This is insanity. This is a big reason there is such low UK tax revenue, such a big gender paygap and also why there is so little money for services and to help people who cannot work. Many people who could work more and want to cannot for financial reasons or find they would not be better off by doing so because of this ridiculous system, so instead have to be supported when that money could go to people who are disabled and can't work.

I am pleased you have seen the need for changing it. I hope more people do. The issues with the crazy tax treatment here of single parents but also the means testing that stops couples working more as well at certain levels of earnings because they would get no significant benefit from it. If people in the UK do not put their prejudices aside and start to look at what will actually work and help everything then the UK will continue to get poorer year by year.

[ThinkingMeat]

Or, like the OP, find they would be working more for free. Or actually be paying more to work more and have less money and less time with their children.

How messed up.

Anybody who thinks this is a sensible system must want to be poorer than they are because that is what will happen. So obvious it's not even a question. The less tax revenue, the less services and help for those in need. Why would you want people who pay a lot of tax not to work more and tell them "tough, work more for free, and don't dare use services you're funding by the way!"

Same nonsense in the arguments that penalising single parents must happen to be fair to couples although the evidence shows this will make the couples poorer too. It's all part of the same weird idea that I cannot quite "get my head around".

I don't understand the mentality at all. It is very interesting from a psychological perspective but I can't "get it" still. Other than it is just about jealousy and grabbiness and "me me me" and not being able to see wider effects and long term impacts that - even if not caring about others, just from a self-interested perspective - mean these are bad ideas. It reminds me of that saying "cut off your nose to spite your face", but surely most of the UK population could not be that vindictive just to try to make themselves feel better than others even when it makes them worse off too, and so support policies that do that? I do not understand why enough people support this crazy waste of money that it is allowed to go on when t
evidence shows clearly these policies will make others poorer and also make them poorer. And spending the same money in a different way would have the opposite effect. I really do want to understand but cannot find a way to explain it. Would make a very interesting case study.

[AviMav]

@Ilikepinacoladass

Single parents aren't always sole parents though, if the single parent was getting additional tax benefits and then also sharing child costs with the non resident parent / getting decent child support, couples might see that as unfair?

That would be none of the couples business. You are really clutching at straws. In the eyes of the law and it is also well known universally that CMS is a unreliable. There's reasons why CMS is not means tested.

[mackthepony]

Work smarter, not harder OP.

It's your life and you only live it once.

Good for you

[Blossomtoes]

Children do not get an allowance in the UK system though.

They do. Everyone, regardless of age, has a personal allowance. It’s why some wealthy people stash money away in their kids’ named.

[Blossomtoes]

Names, even!

[jenjenlinks]

xactly this:There is no increase in take home pay between a salary of £99,000 and £134,000.

But this is patent nonsense given the UK tax system.

I can't believe any of your figures, they don't make the slightest sense.

[StatisticallyChallenged]

@jenjenlinks

xactly this:There is no increase in take home pay between a salary of £99,000 and £134,000.

But this is patent nonsense given the UK tax system.

I can't believe any of your figures, they don't make the slightest sense.

They make sense because of the 100k threshold for both the 30 hour childcare and tax free childcare. There is no tapering for either.

[Bunnycat101]

There are some really stupid thresholds that disincentivise working. The child benefit is one as is the &100k as others have already said but there are lots of other stupid quirks across organisations or because of high child care costs.

eg I looked at increasing from 0.8 to 0.85 but would not gain much at all due to increases in pension contribution. I’ve also worked out I might as well take some unpaid leave during the school holidays as the gain over and above commuting costs, childcare etc isn’t that much. There will be countless people hitting their own ‘nah not worth it’ thresholds in different ways.

[BashirWithTheGoodBeard]

There are some really stupid thresholds that disincentivise working. The child benefit is one as is the &100k as others have already said but there are lots of other stupid quirks across organisations or because of high child care costs.

Yep! This is why it's so daft when people refuse to interpret the issue in any way other than high earners not needing a particular benefit or provision. This thread happens to have been started by a high earner, but there are thresholds and disincentives all across the income spectrum. The personal allowance and student loan repayments are two obvious ones that require no explanation, and then there are loads of cliff edges with UC depending on circumstances too.

[Xenia]

Stat, we used to have that. My father had quite a big married man's allowance in the 1970s and also could covenant money to me at university in year 1 tax free to make up the tiny tiny minim um maintenance grant I got to the maximum full grant as a deduction from tax. Then there was MIRAS - mortgage, some of it, set against tax although that withered away to nothing much. Child benefit replaced a child tax allowance.

Anyway he had an upper tax rate as an NHS doctor of 65% (and over 80% tax on savings interest). By the time you put back in though all those allowances he had I think the upper rate of 45% tax and at least 2% NI and may be adding 9% graduate tax was even worse today. This is one reason we have the highest tax burden for 70 years and people have little incentive to work harder.

This is exactly the same argument as those who live entirely on benefits run of course and I suppor them both technically because of all the tax I pay and morally. If the system allows you work less or not at all and be paid then people have every right to take advantage of that.

The funny thing about Hunt's sleight of hand with the suppoedly "free" future in term time only, not in place for ages and probably won't be available anway and not for those daring to earn £100k is that it was brought in to incentive people to work more but is stopping a whole cohort of high paid women who might have earned more and more and paid vast amounts of tax from working harder. Thsi si not just a nwe thing. For the last 10 y ears women around the £`100k mark and also around the child benefit threshold mark and indeed around the £minimum wage mark have had to decide if work pays.

[BashirWithTheGoodBeard]

I've posted this before, but it's also relevant to this thread since we're discussing marginal tax rates.

https://www.resolutionfoundation.org/press-releases/childrens-benefits-mess-leaves-families-facing-effective-tax-rates-of-80-to-96-per-cent/

[Blossomtoes]

@BashirWithTheGoodBeard

I've posted this before, but it's also relevant to this thread since we're discussing marginal tax rates.

https://www.resolutionfoundation.org/press-releases/childrens-benefits-mess-leaves-families-facing-effective-tax-rates-of-80-to-96-per-cent/

That’s such a good argument for scrapping means testing for child benefit and returning it to a universal benefit.

[BashirWithTheGoodBeard]

I think so!

[StatisticallyChallenged]

@Xenia

Stat, we used to have that. My father had quite a big married man's allowance in the 1970s and also could covenant money to me at university in year 1 tax free to make up the tiny tiny minim um maintenance grant I got to the maximum full grant as a deduction from tax. Then there was MIRAS - mortgage, some of it, set against tax although that withered away to nothing much. Child benefit replaced a child tax allowance.

Anyway he had an upper tax rate as an NHS doctor of 65% (and over 80% tax on savings interest). By the time you put back in though all those allowances he had I think the upper rate of 45% tax and at least 2% NI and may be adding 9% graduate tax was even worse today. This is one reason we have the highest tax burden for 70 years and people have little incentive to work harder.

This is exactly the same argument as those who live entirely on benefits run of course and I suppor them both technically because of all the tax I pay and morally. If the system allows you work less or not at all and be paid then people have every right to take advantage of that.

The funny thing about Hunt's sleight of hand with the suppoedly "free" future in term time only, not in place for ages and probably won't be available anway and not for those daring to earn £100k is that it was brought in to incentive people to work more but is stopping a whole cohort of high paid women who might have earned more and more and paid vast amounts of tax from working harder. Thsi si not just a nwe thing. For the last 10 y ears women around the £`100k mark and also around the child benefit threshold mark and indeed around the £minimum wage mark have had to decide if work pays.

Fundamentally this is the issue - the system should be structured in such a way that there is never a question of whether work pays. Regardless of whether you're talking about someone working an extra hour a week at minimum wage or someone taking a promotion at £100k - increasing your earmings should always leave you better off.

[ThinkingMeat]

@jenjenlinks

xactly this:There is no increase in take home pay between a salary of £99,000 and £134,000.

But this is patent nonsense given the UK tax system.

I can't believe any of your figures, they don't make the slightest sense.

Oh dear. Another who has not read the thread or any other research on the topic. Why comment?