Advanced search

Mumsnet has not checked the qualifications of anyone posting here. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Please read if you want tax credits explained!

(191 Posts)
CarrieLouise25 Wed 08-Jul-15 18:56:38

Hi everyone,

Firstly, I'm not an expert, but I am affected by these changes, and I've done a lot of research into the changes, and I'm hoping to help those who need help.

1. There was a very confusing income threshold reduction from £6420 to £3850.
2. There is also a higher rate per £1 reduction from 41p to 48p.
3. The Basic Family element will disappear.

This is how this works (only for Working Tax Credit). Imagine a 1 parent family with 2 children, working 30 hours a week. Earning £12,000 a year.

Total WTC Basic Element: £1960
Total WTC 30 hours element: £810
Total benefits she could receive = £2770

Now before, the threshold was £6420 and 41p in every £1 reduction over the threshold. So this would be:

£12,000 (wage) - £6420 (threshold) = £5580 x 41p = £2287.80

So total possible WTC = £2770 - £2287.90 = £482.20

So her total WTC = £482.20.

Under new rules, the new threshold is £3850. So the new calculation is:

£12,000 (wage) - £3850 (threshold) = £8150 x 48p = £3912

So under new rules, no working tax credit for this lady. Total loss £482.20

The family element is disappearing, so this is another £545 loss.

With Child Tax Credit, the elements are £2780 per child, so she should still get £5560 for her children.

Old rules:

Wage £12,000
WTC £482.20
CTC £6105

New rules:

Wage £12,000
WTC £0
CTC £5560

Worse off by £1027.20

Hope this is helpful. I'll post some more calculations soon if you like!

BishopBrennansArse Wed 08-Jul-15 19:00:16

By that token does it mean those in receipt of CTC only (ie carers) will not be affected? Does the disability threshold for CTC remain?

CarrieLouise25 Wed 08-Jul-15 19:05:13

I think working tax credit looks affected the most, and then the Family Element of Child Tax Credit is affected.

The Child Tax Credit looks to be affected once April 17 kicks in, and then any one claiming for more than 2 children, won't be allowed.

As far as I can see the disability element for CTC remains (as it should).

Any more info, and I will post!

TurnItIn Wed 08-Jul-15 19:11:52

Fucking. Hell. And IDS was dancing.

CarrieLouise25 Wed 08-Jul-15 19:12:09

But. It would affect Disabled people working (without children) as an example:

Lady working 35 hours and claims working tax credit as a single person. She also qualifies for the disability element. Her income for tax credit purposes is £14,500.

Her maximum tax credits are worked out first:

WTC basic element:£1,960
WTC 30 hour element:£810
WTC disability element:£2,970
Total maximum:£5,740

Take away the threshold @ the old £6420
Less threshold£6,420
Excess income£8,080
X 41%£3,312.80

Her maximum award of £5,740 will be reduced by £3,312.80 because her income is above the threshold. She will receive tax credits of £2,427.20.

Under new rules:

Less threshold£3,850
Excess income£10,650
X 48%£5112.00

Her maximum award of £5,740 will be reduced by £5112.00 because her income is above the new threshold. She will receive tax credits of £628.

She will be £1799.20 worse off.

Singleandproud Wed 08-Jul-15 19:12:56

There's a calculator on the bbc now here I worked it out myself then worked it out here and the figures more or less match.
Wages £8557, single parent, 1 child 25hr a week term time only roll and I'll be £1383 works off roughly £120 a month / £30 a week

CarrieLouise25 Wed 08-Jul-15 19:21:22

I think a lot of people will be worse off sad

Those on the lowest incomes it seems.

mamapants Wed 08-Jul-15 19:25:03

The calculator doesn't ask about childcare costs? So does that mean that doesn't matter anymore ?

Supervet Wed 08-Jul-15 19:26:31

Can someone please confirm when this comes into affect.

CarrieLouise25 Wed 08-Jul-15 19:26:51

This is all I could find on childcare:

From September 2017, working families with 3 and 4 year olds will receive 30 hours of free childcare – an increase from the 15 hours they’re currently offered.

GlitterTwinkleToes Wed 08-Jul-15 19:27:01

We're going to be just shy of £1900 down. Things are already tough as it is sad

Electrolux Wed 08-Jul-15 19:27:34

Message withdrawn at poster's request.

CarrieLouise25 Wed 08-Jul-15 19:28:10

I think they kick in April 16, but for children born after April 17 is when the child tax credits change for only the first 2 children.

Supervet Wed 08-Jul-15 19:30:23

thank you.

TurnItIn Wed 08-Jul-15 19:30:30

I've just worked mine out and I'm going to be £2,500 per year worse off.


CarrieLouise25 Wed 08-Jul-15 19:31:55

Here's some more details:

Changes to taper rates in tax credits – From April 2016 the taper rate in tax credits will be increased from 41% to 48% of gross income. Once claimants earn above the income threshold in tax credits, their award will be withdrawn at a rate of 48 pence for every extra pound earned.

Changes to tax credits income thresholds and Universal Credit work allowances – From April 2016 the income threshold in tax credits will be reduced from £6,420 to £3,850 per year. Work allowances in Universal Credit will be abolished for non-disabled childless claimants, and reduced to £192 per month for those with housing costs and £397 per month for those without housing costs. Claimants earning below these amounts will retain their maximum award.

Limit Child Element in tax credits and Universal Credit – The Child Element of tax credits and Universal Credit will no longer be awarded for third and subsequent children born after 6 April 2017. This will also apply to families claiming Universal Credit for the first time after April 2017.

Removing the Family Element in tax credits, the first child premium in Universal Credit and the Family Premium in Housing Benefit – From April 2017, the Family Element in tax credits and the equivalent in Universal Credit will no longer be awarded when a first child is born. This will also apply for families with children making their first claim to Universal Credit. Households who have been in receipt of tax credits or Universal Credit with an interruption of less than 6 months will be protected. Furthermore, children with disabilities will continue to receive the Disabled Child Element or Severely Disabled Child Element in tax credits and the equivalent in Universal Credit. In Housing Benefit, the family premium will be removed for new claims and new births from April 2016.

RabbitSaysWoof Wed 08-Jul-15 19:47:45

£1263 less here sad

HappyGoLuckyGirl Wed 08-Jul-15 19:51:00

I'm going to be £1,666 worse off. That is going to leave me with £110 per MONTH for food, clothes, medicines, etc.

What the fuck. How is this fair? How can they do this?

HappyGoLuckyGirl Wed 08-Jul-15 19:53:22

It doesn't affect my non working sister with one DS and my mum is better off with no dependent children.

So they are basically pushing WORKING families who were just about hanging on into dire straights. 25 pound a week to feed and provide for myself and my son. sad

CarrieLouise25 Wed 08-Jul-15 19:54:15

Feels like reverse Robin Hood. Stealing from the poor to give to the rich.

But we can all rejoice that at least those that inherit 1 million pound houses won't have to pay inheritance tax. Well, that is a relief.

meglet Wed 08-Jul-15 19:57:58

single working parent here. worse off by just over £1k sad.

Why do I fucking bother. I hope there's a special place in hell for this government.

Rikalaily Wed 08-Jul-15 20:00:48

We will be £1,057 worse off, for the last 6 years we have been entitled to £40 a week HB which we have not claimed, wish we had now. Arses.

ApocalypseNowt Wed 08-Jul-15 20:01:02

We'll be £160 better off. Woo. I would happily give this up or even be worse off if it meant those on lower incomes weren't being royally screwed. I'm going to start donating to food banks. Been meaning to do it but this thread has given me a kick up the arse.

SailorsWifesLament Wed 08-Jul-15 20:03:15

How does this work with regard to the childcare element

BishopBrennansArse Wed 08-Jul-15 20:05:34

Still not clear about those whose sole income is carers allowance. Confusing.

Join the discussion

Registering is free, easy, and means you can join in the discussion, watch threads, get discounts, win prizes and lots more.

Register now »

Already registered? Log in with: