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Tax credits how is this fair?

(17 Posts)
positively9something Thu 31-Jul-14 23:40:01

So I currently work 24hours per week, my salary is 25k pro rata is 15k. I take home �1200 per month and I get �400 per month tax credits, therefore I have �1600 per month for 24 hours work.

My boss offered me 30k for a full time job, this means I would loose �4,800 per year in tax credits and have to pay �3000 per year for childcare, so after all of that I would have �1,780 per month.

How is that fair?

If I work 64 hours more per month, I will have �180 extra, that means for those extra hours I will get paid �2.81 per hour sad

I have friends that are single parents that work 2 days per week in Sainsburys etc and have full council tax and housing benefit and have lots of tax credits.

Why penalise single parents that are able to make a better income than others and are willing to work full time?

Obviously it seems it may be better for me to only work school hours so I don't have to pay for childcare, because when you add up the time lost with your dc for �180 per month it doesn't seem a great trade does it?

This system frustrate me completely sad

OP’s posts: |
HavanaSlife Thu 31-Jul-14 23:46:46

It is crap but they won't need childcare forever, if you leave it until you no longer need childcare do you think you will be able to easily get a job earning 30k? Is there a chance that this job will lead to better opportunities / more pay?

Sometimes you have to look to the future benefits, not how little extra you will earn for doing more hours right now ( if that makes sense)

HavanaSlife Thu 31-Jul-14 23:48:05

And yes the whole system is incredibly frustrating

MissWimpyDimple Thu 31-Jul-14 23:54:56

I know what you mean. The government make working 16 hours a week so worthwhile, but any more really doesn't make much difference at all.

I worked hard and got a pay rise. All that happened was that I got less in tax credits. sad

cruikshank Thu 31-Jul-14 23:59:22

I agree that you have to look at your longer term plans. Your friends who are getting all of those top-ups won't be getting them forever - as soon as their children are grown, the extra money will stop, and then what will they do? If all they've got in the way of work experience for the past 15-20 years or so is a few days a week stacking shelves, they will hardly be in a position at say 40 years old to increase their earnings in order to stay living in the house they're in. Whereas you, if you take this full-time job, will have the security of knowing that you will always be able to earn £30k and possibly even more if there are any kind of promotion prospects.

But yes it is frustrating and seems counter-intuitive to make your life more difficult than it needs to be at the moment for the sake of £180 a month.

LadySybilLikesCake Fri 01-Aug-14 00:01:18

I started a new job (40+hours a week) at the end of Feb and my TC have plummeted so I'm no better off then when I worked less hours. I thought they had made a mistake, but not after looking at your thread. I'm sorry sad It is unfair on LP's. It's difficult for 2 people to maintain a house and feed and clothe a child, let alone one parent. Maintenance can help but it's assuming every LP gets something.

cruikshank Fri 01-Aug-14 00:02:15

Although actually, £180 a month is quite a lot of money - over £2000 in the course of the year. Would it make you feel any better if you were to salt away that £180 and at the end of the year go on a fab holiday with your kids?

LadySybilLikesCake Fri 01-Aug-14 00:09:02

I'm trying to think of it as another way of being self sufficient. I get less tax credits as I need less. I'm earning it myself so I need less of a helping hand. Either way, it's nice to be able to cover the bills.

RainbowTeapot Fri 01-Aug-14 00:09:05

180 a month extra (v decent holiday!), supporting yourself, investing in future career all sounds good to me. Childcare costs will only decrease.

However I'm pretty much working a day a week for free to kep my cv up to date.

I do know what you mean though, we live in an ex ha house so are paying mortgage, etc etc etc and people far younger than us workkg a few shifts in the supermarket have a similar (if not better life). They're lucky to get ha in the area they choose though and as above it eill chamge when children move out etcetc.

positively9something Fri 01-Aug-14 00:43:24

Of course I do understand what you all mean about the future etc. The things is I was offered a new job in a new sector that I have trained to go into. The salary would be 23k per year with potential to make bonus but it involves travelling alot and training in another city for weeks 1,3,5 of my employment, I would still only have �1600 per month after childcare, I think I am going to turn this down and just stay where I am.

I am also making calculations to find out how many hours would be best for me to work. My current employer offered me the pay rise only because he did not want me to leave, I am quite certain he would let me stay parttime if I wanted or just increase by 6 hours per week which would mean I wouldnt have to pay childcare.

The system stinks and it makes things hard sad

OP’s posts: |
positively9something Fri 01-Aug-14 00:44:57

Also I agree that �180 per month = a holiday for me and dd each year, but while she is still only small I'm not sure if its worth having 64 hours less per month with her which equals 768 hours less per year for a holiday.

OP’s posts: |
nomoretether Fri 01-Aug-14 07:56:44

To be honest I think you have to look at it the other way round - that you could be working FT but instead the govt top your pay up so you only have to work PT. I went FT for a while for a job I really wanted but it wasn't worth it in the end. Not just the financial aspect but the racing there every morning and back every night and being too tired to properly be a parent.

LadySybilLikesCake Fri 01-Aug-14 09:26:52

Check your tax credits notification letter carefully! I've just received mine and they have added last year's income onto this year's, so think I'm earning more than I actually am.

AmITwirly Sat 02-Aug-14 21:19:08

The tax credit system isn't fair - it basically makes sense for people to work the bare minimum of hours (16 hours for single parents) and not any more. One of the driving forces behind Universal Credit is supposed to be to stop the cliff-edge of 16 hrs per week: that working extra will always pay. However, as we all know, UC has been delayed massively and who know whether it will actually be fully implemented.

Last year I ran some calculations on my take home pay under different scenarios. I was amazed to work out that if I earned £10k pa working 16 hrs with 2 DCs, my take-home pay would actually be £19,600 !! (due to v. little tax, no NI and lots of WTC/CTC/child benefit) but if I earned twice as much by doing more hours i.e £20k, my net income would be £22,531 i.e. less than £3k more. It would be less than £3k more if I had to pay childcare costs. Someone on £30k would be less than £3k better off again, on £25,411.

It's an odd system but this is the way it works right now: the govt is basically subsidising single parents to work PT rather than FT.

What do you want to do? Is the full-time job good for your future prospects? Will it be very stressful? Will the extra time apart from your DD be worth the extra money do you think?

WhatsGoingOnEh Sun 03-Aug-14 12:06:31

I've just been promoted and lost ALL my tax credits and have to pay some back. At the start I was GUTTED. But I'm now rethinking it. I am trying to start feeling PROUD of myself that I don't need the government to bail me out. I'm making enough money on my own to support the three of us, and to buy a house (fingers crossed).

Honestly, I think the tax credits can make us a bit unambitious. When ex-H left and I rang up the tax credit office, I couldn't believe how much money they'd give me just for being left by my husband! And for the next 5 years, I did coast along on that cash, doing very little.

Then I wanted to buy a house so I pulled myself together and got busy. Now I feel better about myself. Skint! But better.

Tax credits are just free, easy money. They're a bonus when you don't have other options, but if you get offered a promotion and new prospects, you should absolutely NOT let tax credits hold you back.

WhatsGoingOnEh Sun 03-Aug-14 12:14:49

Plus, isn't £1,600 a month after childcare costs quite a lot to have coming in every month? Have you calculated all your bills? Many of us get by on less than £1,600 a month. Plus, if it's a new job you've trained to do, I'm assuming you'd be starting in a relatively junior position and so you can rise up?

Will you only be working in the other city for those three weeks you mentioned? So after week 5, you won't have to go there again?

And -- 64 hours a month less with your DD sounds a lot, but it's really only 2.6 days a month. 2.6 days out of 30. You're going to think I'm an evil mother, but it doesn't sound that much to me. In the old days, single mums would have worked night and day to support their kids if the alternative was the work house.. I think you could justify 2.6 days a month for the sake of her and your entire future.

Kids get much much more £££££ as they grow up. Childcare is costly, but so are phones, computers, clothes, shoes, driving lessons, university fees, deposits for their first flat...

Happybeard Sun 03-Aug-14 23:41:36

So you get tax credits to top up your income when you're earning less. And of you accept this job and earn more, you will need less of a helping hand. Your tax credits will go down, because you will be earning the money yourself.

I don't really understand why this wouldn't be expected.

Well done on the job offer. And the others are right, it does get easier as they get older and childcare costs go down.

1600 a month isn't much in some areas of the country, I do sympathise.

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