To be shocked at how much we would get in tax credits if I did not work

[peppapighastakenovermylife]

I sense this thread might go wrong - I do not mean it to. I am not saying people should not receive the money, nor that they should be forced into work. I am just shocked at how much we would get!

Bit of background. My job is at risk so looking at worst case I wanted to see what we would be entitled to if I was made redundant. I expected it to be very very little.

I put our details into the tax credits website and based on me staying at home with the DC's and DH continuing to work full time we would get £600 a month . That is not considering any other benefits which we might be entitled to (DH earns around 18k)

Ok so that is not a huge amount of money to live on but after childcare costs that is more than I have left over after working full time in a well paid job!

I fully admit I enjoy my job and working. I also get more out of it than salary - pension, fulfillment, career advancement. Also, childcare costs are a relatively short term thing - in four years once all DC are in school they will come down considerably (they are very high at £1400 a month now).

I have no intention of leaving my job but it does make me wonder why I am missing my DC's, running round like a mad fool organising childcare and picks ups and am absolutely exhausted and dont have much time for myself when I am in the short term worse off financially.

It is nice to know there is the safety net though I guess although I now understand why some people make it a choice not to work (and I mean some not everyone who doesnt work, stays at home etc). I genuinely never expected it to be that much. I guess it will also be at risk with the current government.

Ok, I think there is a lot of confusion on this thread.

I will answer renderedspeechless, and hopefully everyone will be clearer.

Tax credits is operated on a strict criteria, with a strict formula.

If two families have exactly the same composition (make up), circumstances (hours worked) and pre-tax income, they will get exactly the same Tax Credit award.

The first step is totalling all the 'elements' that apply to a family unit. This can be the confusing bit, because you have to see what applies.

1.Basic element £1,920
2.Couple and lone parent element £1,890
3.30 hour element £790
4.Disabled worker element £2,570
5.Severe disability element £1,095
6.50+ Return to work payment (16-29 hours)

7.Child Tax Credit Family element £545
8.Family element, baby addition £545
9.Child element £2,300
10.Disabled child element £2,715
11.Severely disabled child element £1,095

So, everyone with children gets

Element 1
Element 2
Element 7
and at least 1 x element 9.

But, if you work over 30 hours, you get element 3 added on.

If you have more than one child, you get the child element for each child.

If you have a baby (under 1) you get element 8 added on, etc.

So, let's take an example, of a single parent on £24k with one school aged child.

Element 1 (1920), because everyone gets it.
Element 2 (1890), because she is a lone parent
Element 3 (790) because she works 30 hrs +
Element 7 (545) because she has a child, so is a 'family'
Element 9 (2300) because she has one child.

Total (1920+1890+790+545+2300)= 7445

However, her earnings (pre-tax) will be taken into account. No deductions are made for the first £6420, so that can be ignored.

£24000-£6420 = 17580

Of the remaining 17580, the Tax Credits reduce by 39p for every £1 of earnings (pre-tax).

So, 17580 x 39/100 = £6856.20

Because her earnings are £17580 above the threshold, she loses £6856.20 of her Tax credits award.

7445-6856.20=588.80 for the year.

Now, I said it was very simple, and what I mean by that is that you can play with the figures for that scenario easily.

Movingbeds used the same circumstances but £18k pa earnings.

You can ignore the earlier parts of working out, because nothing has changed, so then you just calculate

18000 - 6420 = 11580

11580 x39/100 = 4516.20

Her award would be 7445-4516.2 = 2928.8 for the year.

So, dropping £6k in pre-tax income (£3660 in real money) would give an increase of £2340 in Tax credits.

In other words, you would be £1320 worse off by taking a drop of £6000 in salary.

That isn't taking into account housing benefit changes or any other benefit.

Oh I think as well there's a valid point about students and income

I'd keep the 16hr limit- the system should reward tryers and dh has started self employed bs=usiness alongside studying post redundancy: ie is trying

but

there needs to a look at how people can be helped back into work

I know a lot is not possible right nopw wrt to national finances but ideally I would pay carerrs allownace for students as A) most students get to work in the holidays and carers dont and B) better to get off lifetime benefits via study that enable an income that pays the additiobnal costs of sn, surely?

And I think there should be some help for childacre at fe level: FE covers an awful lot of routes into employment and it's silly that a alck of childcare prohibits people becoming employed. I;d do it via student loan system though- so yes you can have your chidlcare costs covered but you will pay it back when your income hits the 'magic' level.

Right now, people are losing their jobs left right and centre. A safety net is imperative and all those who lose theirr jobs have paid into it after all. And putting it too low just causes mroe issues- homelesness etc. TCs etc are taken intoa ccount with HB etc as well, so pushing people from one benefit to the other is pointless.

So we have to focus on gving those who do want to work ladders out of unemployment: childcare, and access to study and retraining.
far mroe proactive in the long term, and far better for the nation at both amcro and micro levels- micro so reducung longterm benefit deopendency, macro ebcuase paying a bit extra to someone trying hard for three years to enable them abck into work is far better than paying them a little less for ever.

During a recession tehy should drop the rules that say people who have a degrree can't get help with retraining costs either- doesn't matter how many BA's you ahvem if the only work going in your area needs an NVQ3 then you should be able to get that NVQ3 and take the job (something that's affected me big time- only work I can reasonable manage in TA work alongside the kid's SN yet can't get funding for the training I need; i'd gladly have it as a student loan extra and repay it).

swallowedafly, the couple who choose to have several children and for one parent not to work would get no more than a single parent with several children working for the same amount of money.

The couple are not being rewarded for one of them not to work. They are being rewarded for one of them working.

Riven, you can claim for a childcare loan but you have to earn under a certain amount to claim it (or be single and not working at all or in a couple where neither of you work)

Riuven they can get it if their income is low

rather, the old children's dependancy allowance has been dropped and it is now paid via TC's.

As the children's element of IS has been dropped for same reasons.

(If I sound like an expert BTW, student - and - employed DH trying to sort out TC claim as we speak LOL....)

OK. Really interested reading this thread so I decided out of interest to see if I would be eliglible for tax credits so went on to HMRC calculator.

I am not working, 2 primary school DC's, consider myself to be extremely lucky inasmuch as life is comfortable. DH salary £55000ish (don't all shout - I recognise and appreciate that life could be much, much worse) and guess what - I am eligible for £116.86!!!!

Why?

Surely this is wrong.

It really begs the question - how many people who really don't need it, claim it? Surely there should be more reasonable threshold - have no idea what upper limit income is - too gobsmacked to check!

Could put this money to put towards a flat-screen tv!

Crackers.

'rewards those who go on to have more children when they can't afford to.'

It's a balancing act I think.

OK take us and where we are- two ways we could have got here

We could have had it that Dh only ever worked PT and I never worked and we decided on that to have four children.

Except that in fact, we both worked, then I becmase a carer for our disabled children, and DH was made redundant. Initially our choice to have 4 kids was based entirely on ability to provide- ds4 was born just before I graduated on the idea that I would go straight to do my PGCE post a maternity break, except that was when ds3 was diagnosed.

But the system currently has no ability to see the difference.

And is it morally right to chase after those who don't bother by penalising those who bothered quite a lot and actually paid the NI for years to help fund it all?

It's complicated: I can think of a lot of ways to improve on this but none which doesn't ultimately risk penalising an unborn child who had no say in their fate whatsoever.

I would rather do it the other
way which is compel those who neither work nor have a valid reason- sickness, disabilty, caring role, study or training- to contribute through workfare after the age of their child starting school.

When I first went back to work after child no2 I was earning £40 pw after paying childcare, tax etc - it wasn't worth my while financially but I needed to keep on the career ladder. In the playground the other mothers were working less hours and earning more than me on benefits - if you're just over the threshold it is very hard and very depressing. However working was good for my self esteem and my CV (not my stress levels) and I'm now in a good job.
Stick with it, it's worth it in the end!

fabsoopergroovy, I wouldn't worry, your entitlement will soon vamoosh.

swallowedafly, I think that there would be big difficulties in requiring both parents to work, becuase the govt. know that there isn't enough childcare to support that.

What I do think is wrong, is that currently DH works 34 hours per week. I stay at home. If we chose to both work 17 hours per week each, we could get the same amount of money, and get a contribution to childcare costs, as well as our Tax credits, and we could arrange it so that we didn't actually need that childcare by doing alternate shift patterns. Which means that we could use childcare as a way to have child-free leisure time at the govt's expense That needs tightening up.

Oh and WRT to limits there are new ones anyway, kicking in very shortly

you are getting figures from old system

Lougle- I thought a bonus wa spaid forr each person working in excess of 30 hours perr week?

It's not just single aprents who get it tougher you know

Plenty of famillies limited to reduced income for toehr reaosns- illness, carer, etc

Single aprents do ofetn get a harsh deal but it's (sadly) not exclusive to them.

Being a sole earner family for whatever reason makes you very vulnerable.

I know this is an unpopular opinion but the reality is often that second families struggle hell of alot financially aswell due to maintenance costs etc aswell. Not that fathers shouldn't pay maintenance but it is often at cost to the children within the second family. Maintenance costs are never taken off the second families income when working out tax credits etc.

The obligation to work thing should extend (and may, not sure as we've always had one in at least PT work) to any person not in work with no overwhelming reason.

So if DH were to be out of work, then either he or I could have exemption as a carer, but the other would be made to fit exactly the same criteria as a single parent or two parents of school age children wholly dependent on ^benefits.

If partly dependent eg Tax Credits then it wouldn't work- plenty of SAHP who do so becuase their partners work shifts, or away, and a SAHP is needed in order to enable the other to work. It becomes a team effort then. Although then you could argue that a truly perfect TC system would have a shift premium that then rewarded the other parent for taking on PT work (but I wouldn't advocate it as the more complex it becomes the more holes for people to fall through)

"you couldn't do that btw - childcare element is paid direct to child care providers and you need evidence."

Swallowedafly, I don't mean falsely claiming, I mean using the childcare as 'babysitting' to go shopping, do chores, catch up on 'couple' time etc. In otherwords, we could both work 17 hours. Say, I work 5-11 for 3 nights a week, DH works 6am-12pm 3 nights per week. So actually 18 hours each. But we could get help towards childcare because we work 16+ each, and not actually need that childcare. Yet we could put our children in childcare, say 1pm-5pm every day, and enjoy afternoons free of children to do whatever we want.

We would have the proof, and we would be meeting the rules, but the intention is not that a family can do that.

(We wouldn't and couldn't, by the way. As I say, DD1 couldn't access a normal childminder. She would need 1:1).

The reality though, is that if you cant afford a second family, then why are you having one? Particularly given that many parents have to limit their family first time round because they cant afford 3,4 or whatever children. Usually a couple will buy or rent a house on the basis of their combined income. If they subsequently split, then for a start their outgoings are likely to increase, because they will be running two homes, not one. If they then decide to Start new families over again, is it any wonder they'll find it tough! There comes a point where people just have to accept that what they might ideally like, whether it's a five bedroom house or five children - if they can't afford it, don't expect to have it.

VH I largely agree although there is a difference between having any children and none, and many second famillies include a partner who has no previous family.

I would like to see a way that could be reflected in the system- for a first child from a second family to perhpas be regarded as different fromm having a huge second family, but I don't know very much at all about maintenance and divorce (thank goodness) so don't know much about how it all works.