Changes to child benefit -implementation

[Kangarobber]

Could someone please explain to me how the Govt are implementing the removal of child benefit next year from hoseholds where one or more adults earns in the higher tax bracket? Or if the details have not yet been announced, what theoretical scheme they might use for it please?

I claim child benefit and earn less than my personal allowance each year. I also have that home responsibilities thing (can't remember the details). DH earns in the bracket that will be affected. He thinks they will rely on either me stopping claiming it, or I will be able to go on claiming it, but then he will have to declare on his tax return that I claimed it and it will get clawed back at that point.

Is this possible or even a realistic method for implementing this change? If nott, how will they do it?

I guess scary I was thinking that if they know my NI number from my CB form then they would be able to run it through their computer and see how much tax I pay, given that it's the same Dept. Is that too simplistic? Maybe it is given what people say about tax credit claim forms. I've never understood why they would need you to fill out a million page form when the Dept already holds the info about how much tax you paid in the last year. Shouldn't it all just be automatic ? Or is it just because tax credits involve more than one person, or data protection, or duff computers or comething else?

If they are going to look at my tax situation jointly with DH then he should get my personal tax allowance. If not, then don't assess me on the basis of him please.

Mind you, this whole thing is not my biggest gripe with Govt policies at the moment, which is why I wasn't particularly questioning with this thread whether this should happen, just how.

There should in theory be Chinese Walls up between the different departments with regards to Data Protection, so it is not as easy as it sounds, especially given that non working spouses of HRTs pay no tax, how would they link them?

Totally agree about the transferable allowances.

It may be that the climb down is that you are taxed on your cb at source, so in my case, they'd have to pay me the tax back the following year as I earn under the threshold if I mark exams.

I'm left wondering if, when they made the headline announcement, they had even stopped to think about the NI credit beforehand. There really hasn't been anything satisfactory said about this.

I doubt it Edith. It was a political 'surprise' announcement during a party conference. Only a tiny number, if any, civil servants would have been consulted in all likelihood. Presumably since then the Dept will have been beavering away to figure out strategies for implementation, costing it all and offering options.

Even if we lose CB I'm covered on the NI front, as there is an arrangement in place for trailing Forces spouses overseas to get their NI credits wehn their spouse changes appointment. It does work, as I've had one lot already credited, and will sort the next lot out in 2013.

I could also change to Belgian cb I think, so I might do that if we can't have the UK one any more.

"Shouldn't it all just be automatic.."

It should but it's not. It's all handled by HMRC and they should be able to cross-reference but they don't. I fill in an annual self-assessment return without fail and was always annoyed that, a few months later, I would get a form from the Tax Credit people asking me to give them the same information all over again. When they finally reform the tax system to something simpler (flat rat tax for example) I'd hope they found a way to stop this kind of duplication

I used to work in Local Govt Finance, and if from my section (CTAX) we wanted some info about a CT payer and could only get it from HB, we had to go and physically ask for the file to be pulled and if we could have the info, as under Data Protection we had no right to it.

It's probably the same for HMRC.

I wrote to them asking most of these questions and got a wooly all in it together letter back, mentioning chnages were going to be made to the legislation. Haven't seen any draft bills so far.
Dh does a tax return to reclaim mileage, so we would be easily found via a question on the tax return. Thank god he knows I get it. Prev dh certainly didn't due to his drinking and gambling. (Very short marriage for obv reasons)
What about other people tho - how do you know to adjust a tax code to claw back cb without asking that question? Cue loads of letters going out to h r empoyees saying can you just ask your dh\dw if they get cb? What a joke. And if you are self employed?

What about the self employed who won't know their saary till the tax return is due the following Jan and they've worked it out - will they claim CB and have to return it if it turns out one is an HRT?

Sounds a complete mess.

saary=salary, or earnings really, as not just one salary if self-employed.

Yes, it also struck me that if they write to all CB claimants and say "Do you and/or DP/DH pay HRT?" then the vast majority of responses will be no, as the vast majority of people are not in that band. What are they going to do, investigate every single one in case they either lied or were unaware of their OH's earnings?

Also, would they even know if you were married, in a civil partnership or co-habiting?

Scary -what I meant about cross-referencing is that if the question the asked everyone was simply "Are you a higher rate tax payer?" then checking that answer is much easier (via a simple NI search -although it seems data protection might come into play) than trying to establish (a) whether you have an OH, (b) who they are, and (c) how much tax they pay. So a simpler system would be to prevent any higher rate taxpayer from claiming CB, but this would of course be different than the policy announced. Presumably they could get round data protection by insisting you give permission for any relevant info to be disclosed on the mailing they would send out? I appreciate their computer systems may still not be joined up enough to cope even with this one 'simple' thing!

And I wonder what they'd do if you were married but not currently cohabiting?

I think they desperately need a ladder to climb down.

The obvious one would be to announce that the underlying administrative arrangements for the proposed change would not be ready in time, and say that the issue will be revisited in due course?

There is a synergy with the (going off at half cock) dynamic tax database. Perhaps that all needs to be resolved and demonstrably working properly before additional changes are made.

How do you find out exactly what the gross pay threshold is for HRT?
DH is thereabouts, we might just scrape back under the threshold (if we're over it) by increasing childcare vouchers.
We will be one of the "losing" households under current plans, as I earn a bit below the basic tax threshold

Kanga I completely agree with your point about tax allowances, you should either be taxed as a single entity or not.

We would lose it next year based on DH's income, but actually by then we anticipate that both of us will be HRT so the point will become moot.

bread - DH and I have just set up our own business and will be paying corporation tax and tax on dividends rather than via PAYE, so a similar problem. I think we will just stop claiming to avoid any potential issues, but we will miss it if we have a quiet patch.

It's the HRP for NI credits that bugs me. How can the Government NOT have thought about something like that?

I think this is just an expensive mistake by the Government, that WASN'T properly thought out before being announced, as they gave no thought to the cut-off point, whereby a single earner household only has to earn £42k to lose ChB, yet a dual-income household can earn £80k before losing it. AND they gave no thought to the HRP.

Hunty I think that is why the idea was that you would still claim, but the it would be clawed back via tax return - because then the HRP is protected.

I need to check, because although I will be earning it will be dividend income amd therefore not subject to NI so I won't get it that way.
I am very happy to go without the CB because I can't honestly say that we need it, but I do want to protect my right to a state pension.

This was such an ill-conceived policy, I think they will have to U-turn.

Is this cut due to be implemented this year? If it goes through?

Blu no, April 2013.

January 2012 allegedly. But I fail to see how it will happen so quickly.

ali - sucking eggs, right?
www.ir35calc.co.uk/dividends_calculation_taxes.aspx

It was announced as "from 2013", which was widely assumed to mean January, but they could easily delay it to the start of the tax year in April to give them more time to sort problems out.

Tips for people near the threshold. Immysparetime increasing pension contributions is another option.

I can't find the income tax rates and personal allowances for 2013-14, so perhaps they've not been announced yet? If it's implemented in January 2013 then the cut off for gross earnings would be £42,475. From here.

Yes grumpy, but appreciated nonetheless Let's just say there has been a LOT to get our heads around!

The whole thing is an ill thought out disaster. If they back down it will be more fuel for the 'keeping it sweet for the posho' papers, and if they keep it without massive changes it will be an unfair change.

Personally, I think it hadn't occurred to George Osborne to do the math. I think he assumed all HRT had a little wifey tucked away who could easily spare the latte fund. I also think the Tories are so far from reality that they assume anyone who is a HRT is actually a millionaire. When you are stinking rich its hard to imagine what money actually buyts when budgeting comes into it.

I see this catching out people like my dh who has to do a SATR; and those who are cohabiting/ self employed/ PAYE will not be troubled too much. For me its a loss I will notice - I work p/t and travel for work; the CH Ben is left as travel costs and childcare pretty much eat up all my earned income.

I GET that we all need to cut down; I don't get why a couple (and not the mythical 45k each ones) on say 30k each will keep it and we won't. I have childcare costs too!

Phew. Remnants of my old life creeping in....

I read the links about HRT payers, and we might actually be alright after childcare vouchers and pension (watch how he now gets a raise that puts us just above again).
I was a bit that they are reducing the threshold in time for the proposed changes, so people on £42k lose out even though they weren't HRT payers this year.