This is a technical question, perhaps for OPO or Stoop.
Politicians are currently arguing about Child Benefit arrangements. It is proposed that those earning over £42,745 will lose entitlement. This is being presented on radio and TV along the lines of "If you are on £42,000 and get a £1000 pay rise you will lose about £2500 of benefits if you have three children, thusleaving you worse off ".
My question is this. Is the £42,745 based on taxable pay. If this is the case then you wouldn't you have to be financial illiterate to lose all this money. Wouldn't you simply put any earnings over £42,745 into a pension fund that benefits from tax-free status (i.e. You put in £1000 which is £800 of "your" money and £200 of tax that don't have to pay. Or £600/£400 if you are on higher rate). So, your taxable pay is below £42,745, you still get your £2500 of child benefit, and you not only get keep your pay rise (for the future) but that nice Mr Chancellor tops it up as well.
Surely I must have got this wrong. It can't be as simple as this. Can it?
