The UK over complicated personal taxation system.....

...highlighted by a study showing a £1 pay rise taking someone with a large family over a £100,000 threshold could cost £14000 in lost benefits e.g. £2000 per child as well as other benefits... It recommended people should up their pension contributions if they are in that scenario or turn down small pay rises!!

The overall view, long known about, is that the tax system is overcomplicated.

My opinion is that anyone in full time employment should not have to rely on or need welfare benefits funded by the taxpayers.. Currently Govt.i.e. (taxpayers) effectively subsidise businesses allowing them to pay low wages knowing the taxpayer. will pick up the shortfall.
By shifting the emphasis away from Welfare at the same time enforcing REAL living wages, the Govt could slash the Welfare budget. It would also make huge efficiency savings in administering a much simplified benefits system.
Of course there is an obviou risk in forcing a much higher minimum wage on businesses, particularly small to medium in that some could go out of business but that could be mitigated by slashing business rates and Corporation tax. If income tax N.I. and VAT level remained unchanged in the initial phases , some of the savings could then be used on infrastructure Health services etc. and paying down the National debt. Ultimately taxes and NI could be reduced subject to the World economic climate.
Of course this would be a sea change and require a considerable amount of number crunching and due diligence to ascertain the real figures but given the fact the current system is unsustainable iit is needed.
The solution is small Govt, but not, as the current administration see it as only benefiting a select few, nor Privatisation, but a genuine redistribution of wealth and how we fund, as a nation, vital services and infrastructure.
It won't happen, since the elite are happy with the status Quo.

 

But don't forget the Office of Tax Simplification, set up by Mr Osborne in 2010!

 

Be careful with your line of thinking or you might end up a socialist...

 

Well THEY clearly have. I wonder what happened to it?

 

The problem there is that anyone on £99999 a year shouldn't be getting a penny in benefits in the first place.

 

Not really being political just trying to apply some logic and common sense.. Using 'common sense' in the same sentence as 'politicians' leads to oxymorons (with particular emphasis on 'morons'). Diverting a nations wealth into the hands of a few does them no favours either.. Yes, like in affluent areas in the U.S: they can live in mansions behind gated communities with security guards to protect them and have the best of medical care but when the rest of the country/World is going to sh*t where can they actually go? Better to improve the conditions and services for all . As my late father in law used to say.."There are no pockets in shrouds"

 

Relevant point but the threshold method of determining benefits at whatever crossover figure is decided is fundamentally flawed and unfair. Sliding scales add to complexity and cost. So make wages fit for purpose. People who want 2, 3 or more kids should make sure they can afford to support them ( a bit simplistic I know but too many rely on the State to make up any shortfall and the 'resp0nsible parents who limit the number of kids they have often lose out) Of course job security, or lack of these days, is the elephant in the room on that aspect.

 

That's all well and good, but it's the child that would suffer.

 

Can't argue with that except I've always been against increasing wages because higher wages push up prices, higher prices then pull up wages and it's neverending spiral of stupidity. The world would be far better if focus was on lowering and limiting prices than on raising prices. But the general point of your post i agree with.

Aldso I know that a sliding scale at the moment costs too much but is that mainly because of a lack of investment in infrastructure to do it? It's 2023 I find it bonkers that tax and benefits etc are checked even remotely manually.

 

Hah! Italy no such thing as PAYE. Like USA you have to complete a tax return every year. The damn forms are so complicated you need a commercialista (accountant) even if you are a pensioner as many of the calculations have to be done before submitting the forms. Omissions or errors result in substantial fines even if unintentional. Of course accountants of various levels of incompetence can charge what they like so you need to shop around and, like plumbers, if you find a good one you hang on to them.

 

They wouldn’t
The sums in the OP are wrong

 

Child benefit was always designed to be universal.
Losing it when you become a high rate taxpayer was a very small saving that makes it now look like a ‘benefit’, but under 150k the U.K. tax system is relatively fair and progressive. Above that it’s still a Thatcherite dream.

 

Child benefit is £21.80 a week for the eldest child then £14.45 for others. If they are losing £14000 in benefits then you are assuming they have approximately 18 children.

That’s certainly a large family

 

Anyone who earns over £60k effectively gets zero child benefit.

 

The ‘sums’ in the OP assume that 2 working parents both earn £1 under the £50k tax threshold and as above have an entire football team of kids including subs.
Whilst ‘possible’ it’s rather a niche scenario. My guess is that it applies to roughly zero people, but it looks like an interesting story.

 

It's still not correct though as the child benefit would be lost on a sliding scale between 50k and 60k...

 

It works on a single person earning over the upper tax threshold
It was a blunt instrument of a rule. 2 parents both earning £49k are entitled to CHB, one parent earning over £50k falls into your scenario.

 

Yeah that's right - so in the OP scenario when either of them got a small pay rise they wouldn't lose the full benefits amount anyway.

Agree its a stupid rule. You can have a family earning 61k made up of only one working person who get no family allowance and also have part of their income at higher rate tax, and a family on a combined 99k of income collecting full child benefit and benefitting from 2 lots of the personal allowance.

 

Don't blame me, Just lifted thopse stats from a BBC news article...you know...the "BBC you can trust" (or so they keep telling us)

 

You didn't link the article - you just commented on what was written.

As above there's a 'possibility' that the 'facts' are correct, but how many couples earning £49999 each pa do you know who have 14 children?

Given all the actual problems in the country, shining a light on this is utterly bonkers.