Should families get a tax allowance for dependant children

[Clariee45]

Just a thought from another thread about there being no help for the squeezed middle who feel they are hardly better off than those on universal credit. Wouldn’t it just be fairer if those families not entitled to universal credit were given an extra tax allowance equivalent to the adult personal allowance for each child.
Why are adults given a tax allowance that acknowledges the basic costs of needing to eat and have a roof over there head etc and yet parents are expected to provide all this (plus 80% childcare costs) for their children completely out of their taxed income

Over 90% of families get paid CB. Less than 10% earn too much to qualify although as you say, there are NI benefits
You are right 90% is not 100% and I do think it should be a universal benefit. My point is (in answer to the original post) is that it is a better way of helping people with the extra cost of children than complicated and divisive tax breaks. Raising children is a net investment in the future of the country, it should be supported. Universal benefits are much simpler and get broader support. Everybody got something from CB (even if it was when you were a child). That's starting to be eroded and the Tories will always reduce a benefit if their supporters feel its something they will not get. Look at how the state pension is supported compared to other benefits.

True - but it does benefit society for people to continue to have children - ideally at a rate that means we will have a decent ratio of workers to pensioners in the future.

right now, birth rates in the UK are low. If this isn’t just a post covid /cost of living blip, but a long term trend, then this could be a serious problem for society in the future.

taxes and benefits have always been used as a way to nudge people to act in a way that will benefit society.

It’s 2.5k a year, no parent is going to have some unfair advantage by this over non parents by having children

Firstly being able to keep £12.5k (x each additional child) more of your own money is an advantage that parents would have over non-parents under your proposals.

Secondly, this sizeable loss in taxable income going to HMT is going to need to be recouped somehow. If parents are carved out of that responsibility (because there’s be no point in seeking to recoup from them what was given away in the first place), then who’s left? Ooh I know!

The do this in Germany along with a range of other allowances.

They should definitely get rid of the higher income benefit charge or at least reform it to consider household income rather than individual income.

Birth rates are too low in this country and we are facing significant issues as we are trying to restrict immigration but need to maintain a decent sized workforce in the future to pay for the welfare state. If people are being put off having children in this country because of the cost we need to do something about it otherwise there will be trouble in the future. It doesn't really matter that parents aren't having kids to fill the demographic gap as that gap still exists and needs to be filled either by immigration or a higher birthrate.

Thank you for saying it’s true 😊.

These things always annoy me, I don’t have DC (not 100% by choice) and I know what it’s like to struggle as a single, low earner. You get zero help. I’m in a better position now, but that is thanks to my DH. I couldn't afford to travel to my (under £23k for full time) job if it wasn’t for him. I have another job in the pipeline (🤞) which is more money (before anyone tells me to ‘up my hours’ or ‘take in ironing’).

I still don’t think parents should get more money for having children that they chose to have.

And no one would pay me for my ironing skills 🤣.

The rich and large businesses? Closing a few tax loopholes for them would more than compensate.

right now, birth rates in the UK are low. If this isn’t just a post covid /cost of living blip, but a long term trend, then this could be a serious problem for society in the future

Im childfree by choice anyway but do feel it should be pointed out that the very same Party that is in power now have always gone on and on about the fact that people shouldnt have children they cant afford (anyone else remember the infamous Peter Lilley speech) so they have no right to whine now that the reckoning has to paid. Never has the phrase "be careful what you wish for" been more apt!

Wouldn’t that be lovely, eh?

The threshold is stupid. Both could earn £49999 amd get it but one partner earns £50001 and they start to claw it back through tax.

Training to be a nurse or an engineer are "lifestyle choices" which are subsidised by the taxpayer because the country would be knackered if only people who could afford a qualification to become a nurse or engineer outright could do so. With birth rates dipping well below replacement rates, with cost being a major reason, having children is a fair comparison.

Also if you reduce the amount of tax a person pays you aren't giving them anything you are just taking less from them.

And if it's not acceptable to "subsidise lifestyle choices" then why is it acceptable to tax lifestyle choices like smoking or having a car or buying a house?

I'm here struggling to remember when any of the training I undertook to be an engineer was subsidised by anybody.

But yes, it was a choice I made. A good choice which benefits both me and wider society.

Having lots of babies born just after the war didn't work out very well, did it?

Firstly training to be a nurse or engineer basically receives no subsidy now a days.
The taxation on cars and smoking can be justified due to the indirect costs picked up by the NHS and therefore taxpayer due to those choices being made. In a society with a privatised health service smokers would face higher insurance premiums or having to pay out of pocket for smoking related healthcare and car insurance would be more expensive due to the chance of the insurance company having to fund medical costs for those involved in accidents. The tax on housing is in lieu of VAT on such purchases and is essentially a standard tax on spending.

@User183642 if the justification for sin taxes is the aggregate cost to taxpayer then surely a tax credit for people having children is justified for the aggregate benefit to the taxpayer of people having more children?

Only asking for the equivalent adult tax allowance to be disregarded, which equates to parents keeping 2.5k extra of their earnings (between them) i.e. 20% or current individual tax allowance of £12500

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The argument for sin taxes is that the public sector has taken on providing services that should be privately funded. The public sector should only do the bare minimum (essentially tax and law administration, policing the judiciary and prisons and national security) with everything else being provided by the private sector. Under such a system taxes would be much much lower but people would have to take personal responsibility.

My proposal is asking for ‘more money’ off you or anyone else, simply to be allowed a tax ‘allowance’ I.e. portion of income to be disregarded in the calculation of tax taken off us. Plenty of people like yourselves I have come across who find they are not on a low enough combined income for any benefits, can you imagine how much more of a struggle that would be with children. It costs more than 2.5k a year to feed, clothe and house a child so I’m not even asking that parents be entitled to keep that extra of the their own earnings. Just to be able to keep the 2.5k you get to keep of your income as a human in this country, why should you be entitled to that and not the money earned for children to eat and be housed?

A tax allowance of 12.5k isn’t keeping 12.5k extra of your income 🤦🏻‍♀️ it is 12.5k disregard from your income i.e if you earn 25k as an adult individual you get the luxury of only having to pay tax on 12.5k of that i.e you only pay 2.5k tax instead of 5k

@User183642 fwiw I actually agree with you but we don't live in anything close to the society you describe and probably never will in our lifetimes. In the context of what is politically plausible a tax credit for children is a pretty reasonable and logical measure that would benefit in the long run.

Having lots of babies born just after the war didn't work out very well, did it?

It did when they were all working and paying tax. Not so much now they’re getting old - an entirely predictable with no crystal ball required scenario that successive governments failed to address for decades.

I agree with you OP, and I doubt £2.5K does more than cover the basics of raising a child in the U.K. like food, clothing, transport. You're hardly "profiting" by it.

I live in an EU country which gives these tax allowances for every child (and more if you have 3+). It is a much simpler way of acknowledging the extra cost of having children - and at the end of the day, those children pay your future pensions and the taxes that enable the economy to continue functioning. You don't have to claim anything, you just submit the tax return and it's taken off.

But you can't look at just one part of the tax system in isolation. I also pay much higher taxes in general - you hit the 30% tax rate at about 20k euros income. Stamp duty equivalent is massive and no allowance for your main residence. But I don't begrudge the taxes because the public sector functions very well. At the same time I feel like families are recognised for the part we play in creating the country's future, through the tax system.

The U.K. is a mess viewed from a European perspective.

@Cowlover89 I don't understand your point? People are having less dc now that's a fact.

@anniegun I agree with you & said CB should be universal.

right now, birth rates in the UK are low. If this isn’t just a post covid /cost of living blip, but a long term trend, then this could be a serious problem for society in the future.

it already is a serious problem