to think Martin Lewis (MSE) has got this wrong re. tax credits

[bytheMoonlight]

to the piece re. Working Tax credits

According to him, a household earning £58,900, from April, will be eligable for WTC if working correct hours.

If this were true, we would receive WTC, which we don't.

So AIBU to think he has it wrong?

In April, I mean.

It does say at the bottom of the table: "(1) limits apply if claiming maximum childcare costs, figures are lower if childcare costs are less." Which means that if you were both working and claiming maximum childcare costs (which I believe are £300/week) then that would be the maximum income to still qualify for working tax credit. If your income is lower or you're claiming less childcare, then your upper income to qualify would be lower.

Unfortunately as tax credits are based on individual circumstances, it's impossible to put the upper income limit for all families.

I am sure they make is as complicated as they possibly can.

The MSE page you linked has been pulled. The new HMRC calculator on WTC and CTC will be out at the start of April and the Turn2Us Benefits Calculator will be updated a little earlier.

I have two children but the tax credits people sent me a letter this week saying that our tax credits would stop because we earn more than £26K.

Alicia that letter is wrong. Re. Ctc, £26k limit is for one child.

The limit for two is children is £32,200k.

I think there has been a misconception generally about the benefits cap.

It seems that a lot of people have though that families who don't work at all have been living the high life on more than the average wage.

What many will begin to grasp very soon, is that any family where the adults are working, will no longer get any kind of top up over the 26 k mark, for rent, council tax, prescriptions, childcare costs.

No matter how high their rent is, or how many children they have.

"CogitoErgoSometimes Fri 16-Mar-12 12:40:52

The MSE page you linked has been pulled."

The link has not been pulled - the first two links posted on the thread don't work but the third one does.

"NowThenWreck Fri 16-Mar-12 11:50:38

The cut off for all benefits, except CB, will be 26K.
That is what the benefit cap is.
So, if you are earning 26.5 k, working full time, and have been getting the child care element of WTC, this will stop."

It is a 26K cap OF benefits, not of income so I'm pretty sure you are wrong in this assertion.

Yes, it is a cap on benefits. People who bring in an income by working are the main recipients of benefits.
If I earn 12 k a year, and have 2 kids and my rent is x amount, I will receive x amount in benefits to top up my income but not so that my total income exceeds 26 k

This is what I mean when I say people are misled on this issue.

Sorry, I disagree.

If your income was made up of ONLY benefits then it would be capped at 26K

However, you could have an income below that and have it topped up by benefits so that it then exceeds 26K.

Which is why I believe your statement "So, if you are earning 26.5 k, working full time, and have been getting the child care element of WTC, this will stop." is incorrect if you are basing it purely on the cap.

Er...not according to the Tax credits helpline yesterday.

FWIW, very few people in the UK have 26 K coming to them in benefits alone. Most people "on benefits" are working people, and the benefits cap just will not allow any benefits to top up an income beyond the 26 K mark.

But, OK, If you don't beleive this then call Tax Credits. Let me know if they tell you different.

lol, you mean you believe something someone on the tax helpline told you? To be fair, they don't have a good reputation for accuracy.

The benefits cap will be applied to the combined income from the main out of work benefits, WTC for example will be exempt (unless they change it yet again before the implementation date).

So yes, although the majority of people 'on benefits' are working people I still disagree with your statement.

When I was with my Ex-P, this current Tax Year (we split 10 months ago), he was earning £16.8k before tax. We got the princely sum of £4.28 a week WORKING Tax Credits. We DID get full CHILD Tax Credits for 4 dc though.

So it doesn't surprise me that the cut off for WORKING Tax Credits is somewhere around the £18k figure, tbh.

Now, if they are talking about the cut off for CHILD Tax Credits being £18k, then . I'd like to see how they'd work THAT one out!!

Saint George - people currently receiving WORKING Tax Credits will only be expempt from the £26k cap for one more year. Then, as Tax Credits will be superceded by Universal Credit, they will only be protected by 'transitional protection', that keeps their income at its current level UNTIL they have a 'change of circumstance'.

The definitions of what constitute a 'change of circumstance' that triggers the loss of 'transitional protection', and instigates the subsequent loss of income, can be as spurious as:

Your youngest child having their first birthday.
Your youngest child having their fifth birthday.
Your youngest child having their twelfth birthday.
Moving house (even if it is done to get CHEAPER accommodation).
Having a partner move in with you.
Having a partner move OUT (So you can be dealing with a relationship breakdown, and add the loss of a significant amount of money on top).
Changing job.
Changing employer (TUPE legislation won't protect you from losing your 'transitional protection' under Universal Credit).

And a hundred and one other seemingly innocuous events.

So this 'protection' you talk about, and how the cap won't affect those in work, only the 'workshy', is, frankly, bollocks.

If you have read the Universal Credit Policy Briefing Notes and the Welfare Reform Bill in its entirety, including all amendments, it shows just what a steaming truck-load of shit will rain down on the hard-working but low-paid people that make up the majority of those claiming Tax Credits in just over a year's time.

You are all up in arms about the discrepancies in the Child Benefit thing where a single-earner on £42k will lose Child Benefit - but what about those who will be losing their Child Benefit who earn just £12k for working FT?? No-one has said a murmur about THEM and THEIR children. And it will be the Child Benefit that is lost first when you go over the cap - because Rent help, and help with childcare costs are taken into account FIRST under Universal Credit, then help with basic living costs (that would currently be covered by WTC and CTC). So the Child Benefit will be the last thing added to your benefits, so it will be the thing that you lose when you go over the £26k cap.

I hope that helps some of you to be more informed about WHY some of us on MN are denouncing the Welfare Reform Bill as hurting those who it's aims were to help - the 'hard-working' people that David Cameron promised he would take care of in his election manifesto.

It shocks me that some people think it is a travesty that a couple who have a single earner on £42k will lose their Child Benefit, but it's neither here nor there when a couple with a sole earner on £12k (or even a combined family income of £18k for 1 FT earner, 1 PT earner) loses their Child Benefit.

Can I ask why all of that was aimed at me?

So in April 2013, the 26k cap will apply to every one who claims any sort of benefits.

So they take your earnings, top them up to £26k and that's it? No more money is given to you after that?

I didn't know that

So in that case, as we earn £35k we won't receive child benefit anymore?

I am not going to be able to add anything to the tax credit question, I just think it is just a case of waiting for the letter from tax credits based on your own personal circumstances. However, I do think that Martin Lewis has given out some pretty dodgy advice in the past such as encouraging people to make money from moving money around various credit cards!

Sorry, yes, i mean from April.

By the moonlight -yes that's the idea. Benefits will not top your income up over 26 K, no matter how expensive your rent/council tax or how many kids you have.

NOT exactly what has been implied by the media, eh? When you say to most people "do you think people on benefits should be able to get more than the national average wage?" Of course they will say "no!"

Because in the media portrayal "on benefits" means not working.

But it doesn't, and actually, currently, a family with 4 kids earning 26 k a year but with a lot of rent to pay would be getting some money from Tax Credits or Housing Benefit to take their income over the 26K mark, so that they can pay for everything.
From April 2012, this will start to change, and when UC comes in it will change again.
The point of UC, really, is to reduce a lot of the benefits to working people which Tax Credits provided. By changing the name, and the administration of these benefits,they can cut much more harshly.
And lay off a lot of public sector workers in the process.

Where did you get the info about the 12K and child benefit Hunty? Do you mean child Tax credit?

alica - same here 2 children income £32k and told tax credits would stop. Think I'm going to check it out if the £26k limit applies to 1 child and the limit is £32,200 for 2 children?

I am pretty sure that 26K is the limit to all benefits, no matter what.

The thing is though, all changes are temporary until 2013, when Universal Credit comes in.
And they won't/can't give figures for that, because they either don't know, or don't want us to know.
It won't be good though.

There isn't a definite income cut off as such, tax credits is worked out by first of all determining the various elements you are entitled to, hours worked, number of children, disability, childcare costs etc.

Then the amount is reduced by your HH income in this order, WTC, childcare, child element family element.

So the income level at which you stop receiving tax credits depends on how much the initial entitlement is. That figure of 58k is assuming you claim the maximum childcare costs of £300 per week

I have never forgiven him for putting on the front page of his site fix your rates at 5% on your mortgage before it's too late in 2007 we would have saved £60,000 if we'd never clicked on that page.
Take MSE with a large pinch of salt.

clare-the benefit cap, coming in in April will ensure that nobody gets their income topped up to more than 26 K by benefits, whether that is WTC, CTC or Housing Benefit.
I am certain that is why the furore about it.

I am going to find out for definite on Monday and will be back, but I am 90 % sure about this.

So as from April they are going to calculate how much hb you receive in year, then take this away from 26k?

So for example £12k of housing benefit will mean the max you can claim in other benefits for the year is £14k?