ZOMBIE THREAD ALERT: This thread hasn't been posted on for a while.
to think that work should be worth it financially, and if not ....(76 Posts)
then do what's best for you family given the perversity of the system.
Please note, not interested in benefit bashing - this is a real situation that someone I know is in. I'm much more fortunate.
We were discussing their situation yesterday. Married couple, expecting in London. She's planning on being stopping FT work, and being a SAHM, but will work freelance, he's got a full time job earning 50k.
Where they live, living on the one salary will be tight, but doable. It'll return about 35k per year after tax plus they will get Child benefit for the child of £20 per week. Rent alone will take around 40% of their annual income. They are fairly frugal people so can make it work.
However, we were discussing the entitled to site, which I suggested they had a look at. The calculator is fascinating so I thought I'd have a go. Turns out that if he reduces his hours too (to 16 hrs per week - though he would have to take a salary reduction more than pro rata to around 14k) and she works 8 (say as a cleaner earning herself a couple of grand a year) - they will be no worse off....
Huh? I couldn't believe it either.
Well, that's the way it is. They would be entitled to Working tax credit, child tax credit, Housing benefit, Council tax credit and child benefits which bring them back up exactly to the 35k income. Plus there would be all the additional benefits like free prescriptions, free school meals etc when the time came.
Their life would be an awful lot better too - as they both would dearly love to spend time with their child rather than working all the hours that the job requires, and with that work schedule it really would be a nice life.
They are not seriously considering this - but in many ways I think it would be the better life. Is that ridiculous? I'm posting this from an ivory tower, but quite a liberal one......
Can't see that they would be better off - they would have to pay towards childcare to claim it & wouldn't get a lot of council tax benefit, if any. I think the entitled calculator can be a little generous!
Working age people now only get a tiny reduction with Council Tax Benefit (I know cos I still have to pay £80).
Also it's not a good idea to rely on benefits when the situation re: the Coalition Govt ''reforming'' the Benefits system is so uncertain.
I'm trying to get well enough to work more hours so I don't have to rely on DLA and WTC.
There would be no child care cost in either their current or hypothetical situation, because at least one parent would always be at home. I do take your point that the entitled calculator is probably being generous, but I've run the figures a few times with various scenarios. The council tax benefit is not full - you're correct, but they would either be paying that out of their own after tax income or out of all the extra working tax credit etc income so it's the same anyway.
The benefit calculator is not 100% correct.
They will not be entitled to free school meals if they claim working tax credits, I know this as a fact!
We didn't get council tax benefit once we got Tax credits, so I would not expect they would get that.
Housing benefit is not available for everyone.
Most of those benefits are means tested, and may change with the Universal credit.
Well we are sort of in that situation. Dh earns 15k in retail management. We have two dc. If I went back to work we would be all of £20 a week better off, which would then be eaten up and more by the travelling costs to get me to any job let alone the one I had. So for the time being I am sahm and we manage. Child care alone would eat up most of any money I'd make even with the allowance from tax credits.
I like being a sahm so I don't mind but I do worry long term with tax credits being reduced and whatever else. But what is the point of working for nothing?
I think there are lots and lots of families in our situation. I know of at least about 7 I've had similar conversations... 2 people I worked with prior to having ds have also decided to sahm for the same reasons.
Interesting, so things are changing. I told you I was in an ivory tower!
Fairlylea that's basically it. I think they would actually be better off in your situation given they would have so much more free time (which allows you to live in a cheaper manner in so many ways) and the 'going to work' costs of transport etc all go away. From what I can see, the financial hit, if any, is more than offset by that.
Housing Benefit is only available for Renters (ie. not me) and is capped at the lowest local rent I believe.
In fact I think it's been reduced for Working Age people like CTB has, so it's not a reliable benefit.
Which is a fairly long way of saying I sympathise and agree with your analysis fairylea - you are genuinely better off not working for your families sake.
As others have said though, things change / are changing and what financially stacks up today may not financially stack up tomorrow. I also think (from memory) if someone voluntarily reduces their hours or leaves a job there's a long wait for benefits to kick in?
And of course, the benefits of working aren't just financial.
I don't think it's wise to leave jobs or cut hours in this current economic climate.
When OH was studying and I was working 20 hours a week (on a fairly decent hourly wage) we were bringing in the same amount of money with benefits as we are now OH is working 45+ hours a week at the same rate of pay I was receiving (same company), and I'm at home.
I still can't work it out.
The entitled to calculator isnt always correct as others have said. It told me i would get £70 a week jsa as well as my wages for a part time job. In reality i get £20 a week jsa as well as my wages. The jsa gets deducted due to my wages but the calculator didnt show this when i tried it.
Yes if you voluntarily leave a job you have to wait weeks for benefits.
They are renters, so HB is applicable if their income was significantly reduced like in the scenario above. They couldn't buy a place in london anyway, 50k salary or not.
Except that her dh will no longer be motivated and have career satisfaction, he will get older and, in a few years time, find it impossible to reinstate himself on the career ladder inline with where he is now.
The benefits will be withdrawn as soon as the child/ren finish school (or probably a lot sooner if we keep the current government).
When the kids leave the nest, they'll have no benefits and no real means to live.
Are they private renters as i thought a lot of private lets couldnt take HB due to insurance or mortgage?
You have to wait either 13 or 26 weeks to claim benefits if u leave a job or get fired.
I think if I knew a couple who were genuinely considering this, I wouldn't blame them for thinking about it in the short term at least.
BUT lots of decisions made when pregnant - at least by me - were based on the short term. Oh, it's too expensive to put two children in full-time child-care so I'm just going to give up.
Actually, if I'd kept working instead of basically stopping for 7 years, we would have had a few lean years and then been back in the pink by now, instead of which I have been out of the workplace for evah....
There you go Kirjava - that is a practical example of what I'm saying. As far as I can see, the system is set up to give no reason for a family to 'earn' more than 16k unless they can otherwise earn vastly over 50k (before tax) if you see what I mean. You might as well enjoy your life.
I find free time with a young child very expensive with the usual uk weather ( been much cheaper the last few weeks).
Putting all your eggs in the governments diminishing benefits basket whilst reducing both parents future employability must be not the wisest idea.
I worked for a year after dc3, child care took all my income and tax credits. Literally nothing left. It was important to me to not deskill over a period of years, and I've now got a pt job on a much higher income. It was def worth it to keep in the employment market. I imagine London with a small child, hours to fill and no spare money could get a bit tedious in the rain -- but then I am no earth mother--
Her DH is a good man - he's less concerned with career satisfaction and more concerned with being able to spend time with the family. Not to say that someone who goes out to work isn't equally good iyswim, but I like his stance on that.
They won't do it though so it is just a pie in the sky discussion - but interesting to me.
So, AIBU? Kind of I think from the answers here - thanks!
OH looked into it and it's described as the 'sweet spot' for work/benefit ratio. The least amount you have to earn to receive the most benefits. It seemed we fell into that bracket without realising.
I don't think it would be a popular lifestyle choice, part-time jobs are hard to get a good wage from, I think I was lucky. It's nice to be able to pay your own rent without jumping through the rings of housing benefit, we wouldn't go back.
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