Child Benefit Cuts Tough on Middle Class Families

Written by on Monday 4th of October 2010

It was revealed today by Government ministers that they have plans to cut Child benefit from those families where one parent is a higher tax rate payer. This is approx £44,000 per year. The plans are for 2013 for the cuts to affect those higher tax rate families.

Here is some thoughts from the team at Simply Maternity;

Now we understand that the government have to make cutbacks as they have messed up and gone overdrawn by quite a few billion. So they’ve looked at the budget and benefits system to see where is all the spending is going. Well they estimate that they could save £1bn per year by not paying out to those higher rate tax payers. Why not pay more out to those who don’t go to work and nothing at all to those trying to make a living. Think about a single mum who is a professional and wants to make a good life for her and her son or daughters. She may earn just over the high tax bracket and then will not get this benefit, but the tax she pays is paying for those earning just under the higher rate tax of 40% and they get the benefit. So they end up better off.

Mr Osborne from the Conservatives announced plans to cap the maximum amount of benefits that any single family can claim at about £26,000 – the same amount that an average family gets from work.

He also announced that the move – which it is estimated could see up to 50,000 work less families worse off by an average of £93 a week and some losing up to £300 a week – this would signal to people that a life on benefits cannot pay.

There are about 1.2 million families which works out at about 15% of recipients of child benefit that could lose out of their child benefit. This is worth £20.30 a week for the eldest child and £13.40 for subsequent children.

Families with three children will no longer be eligible for the benefits – which continue to the age of 19 – face being £2,500 a year worse off.

Below is a table showing the impact of child benefit cuts

Tax Rate Income (PA) Benefit Keep or Cut
1xHigher £43,875 or less £1,752.4 YES
1xLower £43,876 or more £0 NO
2xLower £87,750 (2 x 43,875) £1,752.4 YES
1xHigher &
1xLower
£87,751 (43,875 + 43,976) £0 NO

We think the system should be fair, simply because you earn more why should you receive different benefits.

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