Budget 2012 explained: Live webchat with Mark Dampier, Head of Research at Hargreaves Lansdown, Wednesday 21 March 12.30-2pm

[AntoniaMumsnet]

It's Budget day on Wednesday. What will happen to the 50p tax rate? Will we see a mansion tax? What about child benefit?

It could be a red letter day for your family finances. We are delighted to welcome Mark Dampier to Mumsnet for a live budget webchat. Mark is head of research at Hargreaves Lansdown, the independent financial adviser, and an all-round financial guru. He will be translating the Chancellor's statements as he makes them, and finding time to answer your comments.

Mark will be busy keeping an eye on Osborne, so please don't post questions about your own family finances here (we've got plans for a special Q&A about this later, see below). Do join us here at 12.30, when the fun begins.

Coming up: We've set up a Q&A with a panel of experts to take questions on your family finances after the Chancellor sits down.

Next week, Mumsnet favourite Alvin Hall will be in on Thursday 29 March for a live webchat on savings and investments.

It's all about the Money at Mumsnet HQ.....

i meant bollocks its singular form sounds rather obscene.

Boffin - what about a Lone Parent on £17k with similar outgoings?

£60,000 equals £41,000 after tax
Less £20,000 for two nursery places
Less £6,000 for commuting costs
Less £12,000 for rent on a 3-bed semi

Leaves £3,000 a year.

OK, they would get £10,920 a year help with their childcare costs from Tax Credits, and £8,340 help from Housing Benefit with their rent, but it would work like this for them:

£17,000 equals £13,992 after tax
Less £9,080 for two nursery places
Less £6,000 for commuting costs
Less £3,660 for rent on a 3-bed semi

Leaves -£4,748 a year.

A £7,748 a year difference. That person would only receive £208 a YEAR in Working Tax Credits, and £5,655 a year Child Tax Credits - which STILL leaves a shortfall of £2,093, as they would only be in the black by £907 a year.

So yes, things are very hard for the first family, on £60,000 a year before tax - but they're a damn sight harder for the second family, on £17,000 a year.

And people on £60,000 would do well to remember that.

I am interested about the HRP thing too - because under the Universal Credit rules, from April 2013, if you go over the benefits cap with your total benefits, then it is the child benefit that will be lost - so however the Government proposes to address the issue of HRP for high earners that will lose their Child Benefit under the income rules, is probably going to end up being the same way that they will address the issue of HRP for those on very low incomes who lose their Child Benefit under the Universal Credit Benefits Cap.

So what about the people that studied hard at school (but had SN's or just weren't particularly able), went to college to learn a trade, have worked hard all their life and even in their late 30's are only now getting £17k before tax? Who were earning MUCH less than that when they started working over 20 years ago?

It takes all sorts to make the Country work - but there's plenty of people on £17k or less who work just as hard, if not harder physically, as those on £60k. Who went to college, learnt a trade, and have spent 20+ years working their way up the career ladder in their profession - and are STILL only getting £17k.

Their wage doesn't reflect how hard the work IS - it reflects the fact that their profession isn't as highly regarded.

I really take umbrage at those people who think that only people earning over X amount work hard. It's rubbish. A Lone Parent working 16 hours a week for NMW is working just as hard overall, what with household duties and children to look after singlehanded when they are outside work, as does someone working full-time for £60k, who has another adult in the house to manage the children and household duties - or even if they ARE a Lone Parent on £60k - they can afford to pay for a cleaner to take over some of the household duties - a Lone Parent on NMW can't do that, because they don't have the money, so they have to take on ALL of that work too. It IS different.

And Swed - if I went out to work, I would earn NMW. With care for just my youngest TWO children - I would be paying £20,000 childcare a year out of earnings of LESS than £12k. The ONLY reason that would be possible is because of the help that I would get from Tax Credits - but it would STILL leave me with a childcare bill of £9,080. So it's all relative, £20k as a proportion of £41k (£60k after tax) is 49% of their income. £9,100 (round figure for ease of use) as a proportion of £10,550 (£12k after tax) is 86% of their income - i.e. without Tax Credits help, unsurvivable. Even WITH the Tax Credits, it would STILL be 49% of their income - and having 51% of a starting income of £60k left over is a heck of a lot more than having 51% of a starting income of £12k left over...

'I take my hat off to you and DH for managing with four children on that amount and studying hard..... Let's hope your income goes up amazingly once you graduate....

'

thank you.

DH graduates in a few weeks, his income is likely to go up each year due to his self employment; I am 2/3 through doing my own website for myself, so if I make anything I will top that amount up. I should get my MA in the next 6 months.

We do OK; we're happy, it might not be the easiest life with the boys but when I look about I suspect it's one of the happier ones. That matters enormously.

Although if anyone wants to contribute by chucking interweb marketing (forASD consultancy / support field) tips my way I wouldn't mind LOL ;)

Huntycat, your logic looks impeccable, as ever.

It's dreadful, not least because of the cost of childcare.

I make it a rule never to get involved in this kind of discussion, but I'm going to make an exception (I just know I am going to regret this...)

HuntyCat from your figures (I haven't checked any of these but have added in Child Benefit) the hypothetical person who earns £17,000 a year has a net income made up as follows:

Net earnings £13,922
WTC £208
Childcare element £10,920
CTC £5,655
CB £1,757
HB £8,340

Total £40,802

The person who earns £60,000 a year has net income (after tax and national insurance) of £41,410.

Less than £12 a week better off.

I think that's what was nagging away at me, but I didn't have the ability to produce the figures. Thanks for making sense of it for me.

Can I add that there are no student loan repayments in the £60,000 version as well, even though they might be an issue for people, and they may have additional childcare costs as earning that kind of money suggests a professional/managerial role that could involve well some overnight trips, anti-social hours working and so on, so there are further confounding factors there as well.

Yes I did think about mentioning the student loan - but on £60k you are going to be repaying £4,050 a year so it is going to be paid off pretty quick!

I have been doing a bit of research and will be posting a detailed example soon.

That would be really useful, thank you, and I look forward to seeing the figures.

I didn't include the child benefit for a huge reason - because BOTH families will ultimately lose it, one because their earnings are over £60k, the other because their income will exceed the benefits cap, so they will ALSO LOSE THEIR CHILD BENEFIT. Hence the argument for not including it in the calculations.

People stressing about losing their Child Benefit because they are earning over £60k a year need to realise that there will ALSO be plenty of people on £6k - £17.5k that will ALSO lose their child benefit due to the benefit cap.

With Universal Credit, Child Benefit will be the LAST payment added on to the UC payments - so if the Child Benefit takes you over the £26k cap, then it is the Child Benefit that will be lost.

The combination of taking Child Benefit away from high earners because they 'earn too much', and taking it away from the unemployed and the low earners because it takes them over the benefit cap spells the end of Child Benefit. I predict it will just be a memory for everyone when 10 years has passed.

We are all in this together...

With Universal Credit, Child Benefit will be the LAST payment added on to the UC payments - so if the Child Benefit takes you over the £26k cap, then it is the Child Benefit that will be lost.

That's not how I understand it. I believe that Child Benefit (and certain other non-means tested benefits such as Contributory Job Seekers Allowance) will reduce the benefits cap. The effect is the same of course, but it seems to me to be a misleading appeal

Of course the other misleading information about the benefits cap of £500pw is that it is similar to the average wage of £25,500. Someone earning £25,500 only takes home £378pw - to take home the £500pw that will be paid to some receivers of Universal Credit you would need to earn £34,860.

In addition, the proposed 65% taper means that if someone is entitled to £500pw of Universal Credit and has gross earnings of £50,000 they will still get £56 a week credit.