Introduction on tax

Posted in: Families and Money, Family Finance
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For all the joy of raising a family, there’s no denying that it comes with financial sacrifices and burdens that people without children and those with grown-up children do not necessarily bear.

Fiscal policies and lending practices used to ensure that families were given the necessary financial slack during these demanding years, but today’s support is very selective and targeted only at some family models.  For example there are favourable fiscal policies for dual earner parents  (who benefit from two personal allowances)  together with subsidised childcare and new proposals from the coalition govt  for tax free childcare worth £1,200 per child on joint incomes up to £300k!

Meanwhile the one-earner ‘breadwinner’ family with a parent (usually mum) at home is systematically overlooked by the current fiscal system.

Much has been said about the so-called ‘Marriage Tax Break’  but the measures proposed (worth about £200 per year) amount to just  a small gesture for only some married parents in the lower tax bracket (why not other parents raising children together?!)   and do not compensate for loss of child benefit and hefty fiscal disadvantage suffered by many parents with one adult at home taking care of dependents. 

*Care Responsibilities are Ignored in the UK Tax system*

Example:  On £30k household income single-earner parents with mum and dad taking care of children at home pay £38.46 more tax per week than their dual-earner friends with no children.  On  £50k household income single-earner parents with a mum or dad at home pay £9,627 in income tax whilst dual earner parents (or childless couples) pay around £6k in income tax (when roughly equal earners): in other words a single-earner couple trying to manage on one wage is  expected to pay almost £70 per week more in tax!   No wonder many families struggle to make ends meet when raising children.

Read CARE report below (October 2013). 

Independent taxation 25 years on – does it meet today’s needs?

 

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