Couples earning £100,000 to keep child benefit?*

We promised to restore recognition of marriage to the tax system. Instead, this budget tells millions of parents that they can only keep child benefit by both going out to work.

If Mum stays home to look after the kids then Dad can only earn half what they could take home as a couple before the family loses child benefit.

All the Chancellor has done in the budget is raise the threshold above which benefit is taken away by around £7,000 and replace his previous ‘cliff-edge’ withdrawal of benefit with a steep taper that leaves single earners with children facing implied marginal tax rates of well over 50% if they have one child, and nearer 80% if they have four or five.

George Osborne has done nothing about the main problem with this policy – a single earner household losing their benefit while a dual earner couple earning up to twice as much keep theirs.

A single earner household, say with Mum staying home to look after the kids, will lose child benefit if they earn between £50,000 and 60,000, but a couple where both parents go out to work can keep their child benefit even if they earn £100,000 between them.

What is Conservative about that? And why on earth is the Chancellor still trying to do it even though colleagues have tried to explain the problem to him time and time again.

*if they both go out to work

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6 Comments

Filed under benefits, budget, Children, conservatives, economy, george osborne, mark reckless, residents, rochester and strood

6 responses to “Couples earning £100,000 to keep child benefit?*

  1. It is an anomaly which was well aired in the House. As a supporter of marriage in the traditional way (one-man-one-woman) which the blessings of God in having children, we can see how sad it is that this thought is now neglected by the leaders of the Conservative Party.

  2. Mark, I’m impressed with your willingness to speak you mind and not tow the party line. Where do you stand on Child Benefit? Do you think it should be left alone? If savings need to be made how do we do it fairly?

    I agree that we should be supporting marriage through the tax system. One thought I have about the imbalance between a single earner and joint earner family is that if both parents are working, there are additional costs. They are more likely to have to pay for child care, use more fuel and maybe need to buy another car plus other work related costs. These costs for many will be greater than the amount that will lost by the withdrawal of Child Benefit if one parent is at home.

    Some parents choose to have them both working. If they are less likely to be affected by the changes to Child Benefit, as there an argument that this is not completely unfair?

  3. clare

    Two parents working and earning up to £100k between them and still able to keep child benefit are not necessarily paying large amounts in childcare. They may have free childcare from grandparents or have older children who go to and from secondary school themselves and don’t need a childminder. They may be earning good money pro rata for two or three days work, or work flexibly and/or from home to accommodate childcare. Two working parents can also both benefit from the tax free allowance.

    This decision is a kick in the teeth for stay at home mums and mums who often work in low paid, part-time jobs to bring in some extra money to top up their household income.

    We are by no means ‘wealthy’ or ‘rich’ and more than 40% of the semi-decent salary my husband earns disappears every year in tax, NI and pension contributions. Living in London our standard of living is by no means high. Oh, and he works horrendous hours too.

    I know a dad earning a very healthy six figure salary whose ex will keep her CB because they are separated and a family who have no mortgage and can afford to work part time and again, who will keep their CB despite a high disposable income. Making the child benefit change based on just the income of one parent (but only if they are actually living with the mother/father of their child/children) is totally unfair.

    Thank you Mark for continuing to highlight the injustices of the new system and I hope there is something you and your fellow MPs can do to get this changed to be based on household income. I assume now keeping it universal would be impossible.

    David Cameron pledged to keep CB and his broken promise won’t be forgotten by the voters. He said: “I’m going to give it to you straight. I like the child benefit, I wouldn’t change child benefit, I wouldn’t means-test it, I don’t think that is a good idea.”

  4. clare

    Interesting post on a Conservative website which says that SAHM are basically being deliberately discriminated against in the CB decision not to take into account household income because they have chosen to ‘opt out of the economy’ for a Cath Kidston ‘lifestyle choice”.

    http://www.platform10.org/2012/03/the-backlash-on-child-benefit-comes-from-those-who-cant-see-beyond-their-own-castle-walls/

    So many things wrong with this argument it’s hard to know where to start. Would be interested to know your thoughts Mark.

  5. TonyB

    Hi Mark,
    Now that a few months have passed since this was introduced, are you any closer to persuading the chancellor to rethink?
    If you want support, then I will back you 100%.

    I am a father of 3 and very happily married. I earn between 50-60k a year.
    My issue is not so much losing the benefit, but the unfairness of it all.
    As an example, two adults combined income of 60k is already more than 1 adult earning 60k. If you add child benefit on to the former (assuming three children), the first family potentially has over 500pounds per month more in the their pocket!

    I am pleased that you have seen sense, and I urge you to continue to get fairness.

    Tony.

  6. Jo

    Mark
    I would like to add my voice to those above. I am the breadwinner of our family and we suffered from the early effects of the recession when my husband was made redundant (with a £200 pay out!) 4 years ago. Since then I have struggled to battle for promotion in order to raise our famiy income and having been successful last year we are now faced with a drop in income through no fault of our own (again) purely because the government cannot organise HMRC properly to be able to identifyhow to provide Child Benefit to those families whose total income is below a certain threshold, and so choose to pick on just one earner. I am now faced with an effective drop in income of £2,925 (grossed up for 40% tax) in addition to the rising fuel and other costs that we all suffer.
    Let me also expose the truth about the effect of the taper system introduced early this year – HMRC have already failed to write to me as they should have done. The system is so beaurocratic, they pay the benefit and then claw it back through a system of returns and forms which if anything like the tax credit system they will also get wrong, resulting in numerous costly and frustrating telephone calls. So although I could receive a small a mount of benefit through the taper system I choose not to engage with HMRC as the cost/benefit analysis proves it not worthwhile. I am therefore currently trying to opt out. This, I understand, is the intended outcome for people in my income bracket! So really the taper system solution is hot air!! I have friends that are on dual incomes which both fall below the main threshold and they will be buying things like spa days this Christmas whilst continuing to enjoy their Child benefit, alas not for us.
    Poeple may think it is luxury to have just one earner but if you have children and no ‘free childcare from grandparents’ then the costs of childcare invariably excludes the second parent from working and thus missing out on being able to utilise that valuable second Personal Allowance too. Tax wise, this is now a greater disincentive for a ‘stay at home parent’. The Chancellor calls this a fair and equitable system – I beg to differ!
    Please continue fight this decision.
    Jo

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