To think my pay rise will be pointless?

[IamScarfaceClaw]

I work 30hpw and take home salary is around £1100, I have been in a trainee role for 12 months and have been led to believe that I will be given a pay rise at the end of this month.

Lovely!

However I currently receive tax credits , this takes my monthly income to around £1600-

I did a tax credits calculation with various prospective pay rises (lots of wishful thinking) and it seems that unless I get an astronomical pay rise (1k+, which isn't happening) I will be worse off!

AIBU to think that tax credits should continue to bring income into NLW levels?

It may be worth investigating setting up a private pension. Pension contributions (gross), are 100% deductable from income for tax credit purposes. If you pay the pay rise into a pension like a SIPP (Self Investment Pension Plan) you will long term gain and when tax redits etc change into universal credit in the next few years you'll be on your way to true financial independance with hopefully more pay rises under your belt and actually clearing the pain barrier.

Adish- I am paid more per hour than the NMW, I acknowledge (and am grateful for it) but NLW is (as far as I know,and I may be wrong) a higher figure.

I calculated potential salaries using an annual pre-tax figure, as I understand tax credits to require the pre-tax figure.

I then worked out the pro rata monthly payments, and added this to the tax credits calculation result.

I am happy to be corrected

Are NLW and NLW the same thing now? I though NMW was what people are entitled to by law, but NLW is what people should be getting?

Ignore my last post re NMW/NLW...,just googled.

That is very frustrating for you. That is why I am very critical of the benefit system in this country. Where is the encouragement to work harder or take on more hours. It's madness.

If you add the pay rise to your pension you will not be worse off. The figure you give to tax credits is your gross salary minus any pensions or charity giving.
Do you have dc and have childcare costs above £300 a week for two dc or £175 for one?

We had this problem when dh got a pay rise many years ago. After tax he earnt £50 more per month but the loss in tax credits was just more than that per week. Obviously he didn't refuse his pay rise as to ever get high enough he had to accept but it was a nasty blow to not even be at least still level. It was a well done we like your work here's more money yay!! Inform tax credits well we are going to take more than that off you now! It's a stupid system we would of been better off back then for him to refuse and keep getting more "free" money.

There must be some sort of tapering tax credits scale (like the benefit cap) but if that's set at £1500 for a family of 3, and the 'average' individual income is meant to be £25 K then something is not right!

Isn't the fact that you don't work full time having some effect here?

If tax credits boosted part-time workers' pay to the average income, then there'd be even less incentive to work full-time.

Or am I missing your point?

I just had this. I've had a raise which is great but means I lose some housing benefit (London) and overall I'm significantly now worse off a month. That said I also think the council is calculating wrong but god only knows how long it will take them to sort it out! (Entitledto says I'm due more for example)

All that said if my rent was reasonable I wouldn't need housing benefit top up to begin with so we need rent caps pronto!

ADish think you've got your net/gross mixed up - £1100 take home makes £13200 net not gross annual.

FWIW I totally get you, but I think you're wrong unless your pay rise will take you into the next bracket. I've slowly had lattices over the last few years and tax credits have been stable really.

Plus, assuming you're going to increase your hours to full time when you're fully qualified?

"ADish think you've got your net/gross mixed up - £1100 take home makes £13200 net not gross annual."

No I didn't! Instead I typed all the wrong bally figures in! I meant to type 14,500 for the gross figure!!

However the calculations, for possible salary increases, e.g. 1%, 2%, 3% etc., still hold true. (Just rechecked as I probably put the wrong figure line in there too )

So don't reckon OP is going to be worse off.

"I am happy to be corrected"

Me too! As Tazerface pointed out I put the wrong figure down. typed in the net not the gross!

But I have just put the potential gross salary figures through the calculator and am still coming up with figures that show you not to be worse off.

Worth checking again.

Annoying, but on the plus side at least more of your income is earned. I hate being so reliant on tax credits but for me (as a single mum) they are my second income as it's impossible to run a home on a single income under about £12 an hour (in my area).

I'm going to be losing a significant amount of TC at the end of the month as my eldest will be classed as an adult after finishing college. I have no way to make up the deficit even though my outgoings will be exactly the same - at least not without hunting for a new job with higher pay and leaving one I enjoy. I wish I could have the same income as I have now but earn it all rather than some of it being subject to the whims of whoever is currently in power!

YANBU. I took a promotion at work and lost about £300 a month.

Still recovering financially but hoping it's worth it for the future.

It is totally rubbish but you can't rely on government benefits. It did nearly change before but the Lords stopped it.

It could change at anytime. It does suck though.
I think I have just realised the fact I could earn 8k lower but come out with similar every month.
😖