Why tax and then give back as benefits?

Child allowance, like all other benefits, would be replaced by a tax allowance of equal value and thus would become payable through wages through reflection in the tax code

### Not possible. Tax codes cannot reliably predict whether you're a BR or HR tax-payer - or on the border - so you'll be back to year-end adjustments, tax returns, tax claims, refunds, demands et al - and all the associated costs. Believe me, there is sometimes reason in their madness...!

which, unlike the present code would empower employers to add to wages in cases where tax liability didn't exceed benefit entitlement. Negative income tax in effect.

### And the cost of feeding the necessary cash to very small employers in advance of them making the "negative" tax payment...? I'm glad to help you out - but you really haven't thought this through....

No extra burden at all. Employers already have to maintain tax records and utilise tax tables un PAYE arrangements. The only difference would be that new tax tables would extend below the zero tax liability level. I realise of course that most employers these days employ software to which the systerm would be a cynch.

### See comprehensive rebutal (above)

No I'm not!

All I'm proposing is that the new P45 or its equivalent should reflect tax/benefit status (in the form of a code) and a statement of net tax/ benefit deducted/paid pretty much as is the case now.

### Ha, ha. The P45 (which is easily forgeable ) doesn't result in anything more than a guide to any new employer in same tax year, or a rebate claim after year-end - at which point HMRC have rec'd P35s and cash which confirms (or otherwise) validity of P45. Your proposal - worthy cause as it is - is simply not workable.

### Have you even thought about the people for whom Tax Codes are changed mid-year? How would you cope with that, if the notice arrives between jobs, or during a "resting" period?

It's merely the principle I was illustrating.

~~~ In principle, I agree with everything you've said, Mel. It's the practical implementation which is _always_ the stumbling block - alas.

A receiver bank would only be used in the absence of an employer in which case benefit would be paid directly into a bank account as is the case now,

### And the mechanism, verification and time taken to set up payments to the bank?

Which is the very reason why I use the term receiver. An unemployed or casually employed woman

### sexist....!!!

might for example prefer

### or be forced?

to transfer her benefit entitlements to a husband or partner or even a relative who would simply combine them with his/her own and hand over the money. It would simply be a matter for the individual.

### And how would you verify that (without cost and time)? And if the "friend" doesn't hand over the money - or drops dead so their account is frozen...?

No I'm not, I'm simply proposing a complete integation of the tax and benefit systems under one department. I really don't see where the problem lies. Someone either has responsibility for children or not. They are in work or they are not. Sick or well, disabled or able bodied and so on. It's a box ticking exercise really. It gets expensive when it becomes too elaborate through trying to be all things to all men which probably ends up by causing as much injustice as justice.

#### Wholly agree with you...!!

Both the present tax regulations and the present benefits regulations run into tens of volumes each. This comes about through regular "tacking on" of each Chancellor's effort to introduce more justice into the system. The overall result is a godsend to accountants and financial advisors. It's a nightmare to the rest of us. A tax or a benefit system that is so complicated as to only be comprehensible to professional experts (and even they tend to run to courts for rulings on it) is long overdue for reform. The volumes should be pulped as soon as expedient.

#### Almost wholly agree with you... !!

I'm sure these same accountants and financial advisers would disagree with me. Of course they would and we all know why.

#### My area of disagreement - little of basic tax and benefits stuff gets near "professional advisers" - the recipients can't afford the fees. Hence the need for competently manned call-centres and wel-indexed web-sites - neither of which we have.

I've been a PAYE contributor all my working life and beyond.

#### So you've only ever paid at month-end - not in advance

No more than is necessary under the present system and probably a damn sight less. On the income side the system is to a large extent self monitoring.

#### Which cost would you cut out?

I certainly don't wish to see more civil servants. The one and only target I would ask any government to set would be a 10% cut in the size of the civil service within the space of one parliament and a further 10% cut during the next. Such savings can only be made if government is prepared to sweep conservatism and departmental inertia to one side and look for new and better ways of doing things,

#### Sadly, I agree again. Would prob set the bar a bit higher, too. But the IR unrest and redundancy cost has always - and will always - stop any gov't going down this route.

I use Google groups

#### Ah - in that case, drop them at once and revert to OE. Google is on course to overtake M$oft - and we all know what that would mean....

Where I work most people (with children anyway) get a lump of tax credits and they seem pretty happy. So happy that they can afford to take plenty of time off sick, it would seem... perhaps because the less you earn the more you'll get in tax credit at your next review.

Or maybe I'm just getting bitter and twisted. In principle I agree with the idea, and it's not the government's fault that a proportion of the unwashed masses are always on the lookout for new ways of getting more money for less effort. It's always been that way and always will be.

Andrew McP

Maybe my memory is serving me badly, but I seem to remember that when I was young my father had a tax allowance (ie increase of tax code) for each child *and* my mother got family allowance from the post office each week. In other words there was both a tax allowance and cash benefit.

My recollection too!

The tax allowance was phased out over time to fund above RPI increases in child allowance.

The thinking was primarily that the tax allowance was of little use to low earners who paid little or no tax anyway. A sound consideration in my iew.

A secondary reason was the belief that money going into the male breadwinner's pocket had a tendancy to stay there and be spent frivolously whereas money that went into mum's purse would be more likely to be spent on the family for whom it was intended.

Yes, this was the reasoning behind the switch from the old Children's Tax Credit (paid as a tax allowance to the higher earner) to the Child Tax Credit (paid to the "main carer"). They did a survey proving that the "mum" (or main carer) was more likely to spend money "on the children" than the father.

However, it turns out that spending money "on the children" only meant spending money directly on the children, such as clothes, food, sweets, toys etc. It didn't include spending which indirectly benefits the children, like paying the mortgage to keep a roof over their heads, or paying the gas bill to keep them warm.

So it's obviously far more important that children get sweets than a warm safe house!

And beyond that, this is an area where the state should not get involved. At the end of the day it's a matter between husband and wife and an issue which they have and always have had to resolve.

money

house!

Exactly - and since the level of both tax credits and means tested benefits are assessed on *joint* income, the system is fundamentally flawed if husband and wife aren't trusted to support each other and the kids.

Add to that the new requirement for benefits and tax credits to be paid into a bank account, and that most couples have joint accounts, it's pretty irrelevant who gets paid. But it seems to be a big issue to the government and the pressure groups they listen to.

I've read through all of your replies to this question - all very good and sensible. Bottom line is who actually bothers to vote? People on benefits generally don't bother to vote.There is a golden opportunity for Cameron to say, vote for me and I'll cut taxes and government expenditure. Some people who would worry about their benefits being cut would vote against him - most would continue to watch their soap operas, drink, take drugs, produce more babies and be totally oblivious to the real world. I hope the time has come in UK when people wake up and realise that, say, 10% of the population are effectively living off their backs. Why should hard working people have to support parasites?

I agree with this last sentiment entirely.

Although I have no reservations regarding offering anybody a helping mind, that is a mile away from seeing oneself as a milk cow.

I'm afraid I say to those who complain "How am I expected to live on £n /week (benefits)?" I tell them "You're not! The benefits are intended to tide you over. You're expected to keep yourself!"

and as was previously pointed out, the majority of benefit recipients are pensioners. How are benefits expected to tide them over? Until they win the lottery?

In message , Robbie writes

A healthy, single unemployed adult with no savings or other income would get £57.45 per week job seekers allowance.

A similar pensioner would receive £114.05 per week pension topped up with pension credit.

This excludes any disability benefits, housing benefits or council tax benefits they might also get.

Therefore the pensioner's need for more than just enough to tide them over has already been allowed for hasn't it?

Though of course the level of pensioner benefits are far higher than for younger people. Pensioners on the MIG are better off financially than a large proportion of working families.

The sad answer to that is that there are two ways to keep the, er, parasitically minded happy. Either police them into submission (very expensive and divisive) or subsidise them into submission (also very expensive). The alternative is the US system where you don't give them much money or healthcare and hope they'll all kill each other.

The trouble with that is you end up with the biggest prison population on the planet (not that we're far behind as it is!) That's expensive as well.

At least money that's paid in benefits is spent in the economy, contributing to VAT and business profits. So not all of it is "lost".

Andrew McP

Cos a lot of the parasites are employed by the state and they have guns and things and if you don't pay your taxes they will come round at 4am and kick your door down and beat the crap out of you.

A bit rich coming from someone who has lived off the back of the taxpayer most of his life.

You got your pay out of taxes. You still live off taxpayers. You are a parasite.