Recent news indicates that many families with children will now being paying a much higher tax rate than millionaires and this was confirmed by government. This is the result of a climb-down in child benefits which families with children could pay a rate as high as 73%, according to a disclosure made by David Gauke, treasury minister.
Depending on the number of children being claimed for child benefits, families may pay anywhere from 53% to 73% on anything that is earned over £50,000. On the other hand, at least 20% of those who earned at least £1 million up to as much as £5 million only paid 40% last year. Part of the reason for this was because of the huge criticism levelled at government that was called a ‘cliff edge’ wherein anyone earning above the threshold of £43,000 would lose the child benefit.
As a result there is a new policy in effect which tapers the percentage of child benefit which can be paid to buyers and this has created an inconsistency in tax rates. The newest policy set forth by government is that if a family only has one earner who makes more than £50,000 up to £60,000, that wage earner will see his or her benefit progressively removed either through the tax form or code.
The part of the policy which doesn’t make sense to most people is the fact that a parent with only one child who earns between £50,000 and £60,000 would be paying only 53% whereas another parent with four children in exactly the same earnings would pay a much higher rate of 73%. This is totally inconsistent with any semblance of logic and again just one more piece of evidence in the mounting stack that those who are higher incomes and have fewer children are given more tax breaks that hard-working families.
