Child benefit: it just doesn’t add up!

child benefit

Now, I was never brilliant at maths at school, but the figures for the recently announced child benefit cuts just don’t seem to add up.

If one parent earns £50k, the child benefit will be reduced. If they earn £60k+ it will be stopped entirely.

How can it be that a family with one working parent earning £50k will have their child benefit cut, whereas two working parents, both earning £49k, will not be affected?

If the government is looking to cut child benefit, surely it should be calculated on household, instead of individual income. The argument is that it would involve a lot of costly administration, but, as my mate Carly said: “It’s an administrative nightmare for me to have to pay my council tax and sort out my tax return, but I still have to do that!”

The ‘should they/shouldn’t they receive child benefit?’ debate seems to have divided a country. You only have to type #childbenefit into Twitter to see a barrage of conflicting opinions.

Some of it is in support of the cuts: “If you’re lucky enough to be earning more than £50k stop moaning about child benefit cuts.”

Some of it is against: “One income household just over the threshold. Cross to think of households with 90k income still getting it. Unfair.”

And some, just a tad bitter: “I detest the idea that my taxes go towards the benefits of people that earn more than I do.” Bet he’s a right laugh to go for a pint with.

But everyone must surely agree that it’s going to be a logistical nightmare to manage.

child benefitThis isn’t helped by the onus being placed on the family to stop the benefit. The government has sent letters out to ‘high earners’, but has by no means contacted everyone.

If one parent earns £50k, the child benefit will be reduced. If they earn £60k+ it will be stopped entirely.

And it is up to you to contact HM Revenue to stop your benefit if you don’t want to fill in a tax return at the end of the financial year. You will probably only want to consider this if you or your partner earn £60k+. And even then, you might want to think twice – as opting out can end up affecting your National Insurance credits and your future entitlement to State Pension. (See here for more information).

Officially, the deadline to cancel your child benefit was 12am on Monday January 6. However if January’s child benefit money hasn’t yet been paid into your account, you can probably still opt out in time to stop it. Call HM Revenue & Customs on 0845 302 1444 to do so.

All of this is meant to save money – but it sounds to me like hundreds of man hours at the tax office to sift through thousands of forms declaring £80.

I get that people think the rich shouldn’t be receiving benefits, but it just doesn’t seem that black and white.

My friend Penny said:  ‘I know my brother-in-law earns £50k and works shunting trucks for Tesco, he knows the value of a used truck and of new trucks. He works all through the night and every hour God sends, his wife is a dinner lady and earns very, very little… However, they’re losing their child benefit and it will have a huge impact on them. He’s really upset about it and very confused about what he’s meant to do and all the forms.’

And for the 85% of the population who think they are not affected by the cuts, hang on, your child benefit will only be uprated by 1% a year over the next three years: lower than inflation.

On the plus side, there might be good news on the horizon, with proposals of tax breaks for childcare.

So fingers crossed for that one.

All sorts of changes are afoot; it’s a hugely confusing time for all of us who are trying to follow what the news headlines mean for our family finances.

If the government isn’t going to write to us about these things, maybe a good new year’s resolution would be to pay a bit more attention to the news, so we don’t miss out or trip up.

If nothing else, that, at least, adds up.