Benefits - does this sound correct?

[PollyIndia]

I'm a lone single parent but have always been lucky enough to be able to manage financially through bits and bobs of consultancy so never had to claim benefits, other than child benefit.
I now am running my own business with a business partner who is a single parent but with involvement and some financial help from her ex. She has been on topup benefits, so takes £1000 from the business then her benefits top her up to £3000 per month.
We have both agreed to take a proper salary of £3000 a month from the business from April so no more benefits, however she didn't take tax into account and says she needs to have £3k take home pay. I have used a basic tax calculator and worked out that even £48k pa so £4k per month doesn't quite give you a take home pay of £3k per month.
I am posting here because lots of people seem to know about this here based on threads I have read. But AIBU to think I have calculated something wrongly. Surely people can't be on an equivalent £48k pa salary through working 16hours per week and taking home £1k per month which is topped up?
I hope I am wrong as the business can afford to sustain that but she wants to come off benefits. Both our sons are pre school age.
I must be wrong, surely?

[Babyroobs]

Barbaba, that doesn't sound right unless one or ore of the kids have disabilities. If they are getting more than a £40k salary with no HB then something is surely amiss ?

[Birdsgottafly]

Everyone that I know and these people earn just over Min wage in Social Care jobs, get very little HB paid.

They live around me in £380-450 a month, rented houses.

HB is means tested, unless you are on IS or JSA, you don't automatically get it.

I know people on various other benefits, not working, who have to top up their HB/CT.

The only way that I've ever heared of LPs getting these sort of incomes to live on, is because they either have a very disabled child, are disabled themselves, or get high maintenance (which is taken into account for HB/CT).

Barbera, it's her lack of housing costs that make the difference.

When I used to do benefit calculations for the Welfare Rights place I worked in. It was housing costs that prevented people from taking up work.

[antimatter]

So your partner takes salary of 12K annualy.
Then through HB and other benefits she gets an equivalent of 2K in cash.

was/is she actually declaring that earning of 1k

[Birdsgottafly]

What are these mythical benefits?

Do get back to us OP, my local Welfare Advice places will be grateful.

The people that we deal with get around 17-23k, with top ups and only if there's childcare involved.

It could be the 70% childcare element pushing up the amount, but then that will only go on till the child starts school, so very shortsighted to base her life on that.

[mummymeister]

when the child goes to school and she loses the childcare then the partner will be asking for her salary to go up again.

seriously, I would not be in business with someone who has so little grasp of the real world.

[80sMum]

"A single parent not working will get benefits that are equal to a £29,000 salary so I could see that as a figure."

Oldraver are you sure? Is that the net amount? That sounds a ludicrously high amount. It's probably far more than most people could possibly hope to earn from working. Where is the incentive to work, for anyone in receipt of a payout of that magnitude?!

[Babyroobs]

Most of the benefits would be going to pay rent or childcare though I imagine, it's not as though it's cash to fritter away. I agree it's still a huge amount but in some areas rents are very high.

[longtimelurking]

No idea about the benefits situation but do you really want to be going in to business with someone who has this attitude? If she can't even understand the difference between gross and net wage how is she going to cope when the business goes through a lean period or you get an unexpected tax bill or major expense?

[BarbaraofSeville]

Most of the benefits would be going to pay rent or childcare though I imagine, it's not as though it's cash to fritter away

Just like people on similar or slightly higher incomes who do not receive any benefits having to spend a large proportion of their salary on rent and childcare.

The difference in income between working part time and receiving tax credits and working full time on £30/40k can be quite small, especially considering that full time workers will have higher costs on things like travel to work and possibly childcare.

[Babyroobs]

Barbara- Yes I totally agree that those not on benefits have high rents and childcare costs too. We both work 80+ hours between us, get no tax credits or anything and after tax and pension contributions are stopped we just about get by. We are lucky we have no childcare costs ( 4 kids) but that is only because we work around each other and laways have done. Dh works days, I work nights and weekends, it is exhausting. However , I don't think the vast majority of people claiming top up benefits are getting anywhere near an equivalent to a £30/40k salary. Some families with lots of kids / high rent or kids with diasabiities may be but not the majority. Most of the lone parents I know work 16 hours a week get some help with rent and sme child tax creidts and working tax creidts + maintainence on top but nothing like £30k .

[BillSykesDog]

She's having you on somewhere OP. Either she not declaring the salary she has now and is expecting you to make up the shortfall of losing her fiddle, or she's lying about how much she receives to extract more money. But I don't believe she gets that much with one child.

Even all the Daily Mail stories where they have eleventy billion kids they're normally only just pushing £60k. Sounds implausible.

[BarbaraofSeville]

Babyroobs

I put the circumstances of the relative I mentioned above (couple with 5 DCs working 24 hours a week, estimated monthly earned income £900 - I underestimated a bit before, no disabilities or childcare costs, mortgaged property) into //www.entitledto.co.uk).

They deliberately work 24 hours per week between them to maximise the tax credits entitlement and are quite open about this.

The result is that they are entitled to £1820 pm in CB/CTC/WTC/CTB plus £900 pm from working gives a monthly income of £2720, which is nearly £300 pm more than I receive after tax on a £40k salary, but I do pay into a pension and they would be entitled to £350 pm in CB anyway as long as they earn less than £50k.

Of course they wouldn't get anywhere nearly as much for 1 DC, but it is the fact is that top ups on part time work can be very significant, especially for large families or where HB is concerned.

[DeoGratias]

"The difference in income between working part time and receiving tax credits and working full time on £30/40k can be quite small, especially considering that full time workers will have higher costs on things like travel to work and possibly childcare"

Indeed, the example I often use is twins one on £50k a year who pays £14k a year mortgage, £14k full time child care costs and £14k tax out of that and her twin sister who has a child (both are single mothers with no father paying) and does not work. Their net incomes are not too different.

it's the big conundrum of our day - how do you make work pay whilst also ensuring benefits are high enough to ensure people are adequately housed and fed?
(We should not forget that a lot of those getting tax credits though are two couple families both working full time for the minimum wage too)

[Babyroobs]

Barbara - Yes it is shocking that they can get so much in top ups for working so few hours. I don't agree with many Tory policies but their idea to limit CTC to 2 kids I thought was reasonable. Not sure whether it has been shelves for now? Like I said before we have 4 kids and work in excess of 80 hours a week around each other and don't come out with a great deal more than the family you mention. It does make me wonder why we bother !

[Natsku]

it's the big conundrum of our day - how do you make work pay whilst also ensuring benefits are high enough to ensure people are adequately housed and fed? That's why I'm in favour of Universal Basic Income so working is always better than not working but everyone still has enough to live.

[pickmeupputmedown]

I too suggest you double check her benefits as they sound excessive. Both myself and teenage DD work 40 hours a week. I take home £1200 p/m and DD £550 p/m (apprentice wage) and we are not entitled to diddly squat in benefits.

[NeedsAsockamnesty]

birds CM is not taken into account for HB it's excluded income.

[Babyroobs]

Pk me up - That will be because you are not considered to have any dependents any more. I think if your income is less than around £13k as a single person you might get some working tax creidts.

[NeedsAsockamnesty]

Fwiw.

A lone parent with say 3 kids working 16HPW at the NMW even if living in a 3 bed council house
Would not get full rent paid unless there was a person with a sever disability within the household.

Her incomings from none excluded income would still be over her applicable amounts. So she would be paying partial rent.

[MrBensMrs]

Tax credits of course being a top up for companies paying less than a living wage. Agree that work should always be the first option, and the government shouldn't be subsidising part time workers - I'd love to be paid to work 24 hours a week shared with my husband and have 5 kids

[NeedsAsockamnesty]

Huh bens paid employees get emmmm paid for working it's what happens even if you work 24 hours

[MrBensMrs]

There's an example of a couple above not working over 24 hours as their benefits would be cut and they earn more than I do earning £45k working full time

[NeedsAsockamnesty]

In my example a few posts ago the same parent unless they had very high childcare costs would still be paying something towards her rent even with a disabled household member.

[TrinityForce]

Jesus some people are truly deluded

[NeedsAsockamnesty]

Ohhh I get it now bens I didn't see that post. Fwiw no they don't. They will be subject to the current benefit cap that does not allow that to happen