Universal Credit - how can this be right?

[beentheretoo]

I’ll admit I know very little about Universal Credit apart from what you hear on the news thankfully (touch wood) never had to claim).

A friend recently got a new job 2 days a week I congratulated her and said it’s the type of job they are always looking for people I bet they’ll be offering you more days in no time. She then said oh I don’t want more days it’ll affect my UC, I’m allowed to work up to 16 hours before they take money off me and besides I’m really looking forward to having 3 days to myself once the kids are back in school. She’s a single parent her DH left her when she was a SAHM she was on full UC for a bit then had another PT job now this new one (she has a degree but doesn’t want to go back into that field).

I was thinking about it how can they be right that if you work 16 hours you get full UC but if you work 20 you get money taken away? Where’s the incentive to work more hours? My friends DC are older so doesn’t need childcare and I’m sure loads of people would love 3 days to themselves I bloody would.

Am I getting it correct then?

@JosieJarker

Im not trying to avoid tax. Im trying to think of ways of making enough money to buy a house. I suppose if it went over 6k I would have to tell them and pay the taper. But even 16k is not enough for a deposit in some areas. Its a trap.

Honestly? Yeah it's a trap and there is no easy way out.

If it was me I'd say fuck buying a house. They are overpriced anyway and homeownership is overrated. the state can pay your rent.

If it was me I would stuff my pension - salary sacrifice everything above minimum wage - get yourself a fat pile of assets in there - you're young, and with drip feeding and dollar cost averaging there's a reasonable chance anyone can hit the lifetime allowance if they put a decent amount in each year, enjoy life and when it comes to retirment you'll have a princely sum which you can move to a country with more favourable tax terms, lower cost housing and cost of living.

It wasn't you who created the rules, but you use them to play the game.

@JosieJarker I’m sorry I know this never goes down well. But if you have the ability and skill to save over 6k for a house deposit. You should go for it! wink

Thanks, I have the ability because I'm being very careful with my budget and saving into accounts that give good returns, help to save and share save.
The share save could double my money, I'd call that luck rather than skill but fingers crossed.

I’ve just found out that the free 15 hours childcare is only for people on benefits or under a certain household income (roughly 15k)

I went back to work full time when DD was 10 months and was really looking forward to have 15 hours of her nursery fee taken off at the end of this year.

I thought the 15 hours was for anyone with children regardless of income and then the additional 15 hours at 3 for parents are are employed.

I find the entirety of the benefits system to backwards. How is anyone on benefits meant to be motivated to find a job or more hours when they get free money equivalent for doing sweet fuck all.

If it was me I'd say fuck buying a house. They are overpriced anyway and homeownership is overrated. the state can pay your rent.

It’s just so insecure though. Private renting anyway. You only ever have 2 guaranteed months ahead of you in your home. My last house I was given notice because the landlord wanted to sell. I’ve been here two years and I can’t relax for fear that the covid situation will put current LL in the same situation of having to sell. I keep an eye on local Lettings and there is nothing in my town. It’s been like this for the last couple of years. I was so lucky to get this house when I did. I’m dreading the day I’m told I have to leave. Which might never come but I can’t rely on that.

I will definitely look into upping my pension.
I earn different amounts each week so that might make it more complicated.
Can pensions be passed on as inheritance?
Say if I die could my son get any extra I put in there?

@UhtredRagnarson

If it was me I'd say fuck buying a house. They are overpriced anyway and homeownership is overrated. the state can pay your rent.

It’s just so insecure though. Private renting anyway. You only ever have 2 guaranteed months ahead of you in your home. My last house I was given notice because the landlord wanted to sell. I’ve been here two years and I can’t relax for fear that the covid situation will put current LL in the same situation of having to sell. I keep an eye on local Lettings and there is nothing in my town. It’s been like this for the last couple of years. I was so lucky to get this house when I did. I’m dreading the day I’m told I have to leave. Which might never come but I can’t rely on that.

Yeah I understand 😢

It's utterly shit. The UK has disenfranchised two generations by financialising housing.

@JosieJarker

I will definitely look into upping my pension. I earn different amounts each week so that might make it more complicated. Can pensions be passed on as inheritance? Say if I die could my son get any extra I put in there?

Yes - a pension that has been uncrystalised or in drawdown can be passed on to your son, and it doesn't even count as part of your estate for IHT purposes. Only if you buy an annuity does that option disappear.

The pension is my plan for home ownership. In retirement. If I can get what I've calculated I can into it, I'll draw down 25% two years running. (You can only do 25% at a time tax free.) That plus savings should get me a nice little two bedroom place in the area I'd like to retire to on the continent. The rest I'll draw down in bits and bobs to keep me ticking over plus state pension. And yes you can pass pension on. Plus our work pension has a death in service benefit that goes to a named beneficiary.

No that's correct. I'm in a similar position and would love to work extra however I would be worse off. The system is crazy!

Work extra and put it into a pension.

If you have a 3-4 year old the usual expectation is 16 hours a week.
5-12 year old - 25 hours a week
13+ - 35 hours a week.
For childcare upfront you ask for a Flexible Support Payment

UhtredRagnarson I could have written your exact post (except I've been here five years). Rents in my local area have also seemingly shot up by about 200-300 pounds over the last year. I don't know why, but it's worrying!

Yes rents have rocketed here too! What I have seen available over the last couple of years tells me I couldn’t afford to live in my hometown anymore if my LL gives notice. I’m already stretched as it is. Very worrying. I feel very sorry for anyone having to find somewhere to rent right now.

It's awful the whole thing ☹️

@24butfeeling80

I’ve just found out that the free 15 hours childcare is only for people on benefits or under a certain household income (roughly 15k)

I went back to work full time when DD was 10 months and was really looking forward to have 15 hours of her nursery fee taken off at the end of this year.

I thought the 15 hours was for anyone with children regardless of income and then the additional 15 hours at 3 for parents are are employed.

I find the entirety of the benefits system to backwards. How is anyone on benefits meant to be motivated to find a job or more hours when they get free money equivalent for doing sweet fuck all.

Because it's not free childcare , it's early years education for children considered the most at risk of falling behind.

@24butfeeling80

I’ve just found out that the free 15 hours childcare is only for people on benefits or under a certain household income (roughly 15k)

I went back to work full time when DD was 10 months and was really looking forward to have 15 hours of her nursery fee taken off at the end of this year.

I thought the 15 hours was for anyone with children regardless of income and then the additional 15 hours at 3 for parents are are employed.

I find the entirety of the benefits system to backwards. How is anyone on benefits meant to be motivated to find a job or more hours when they get free money equivalent for doing sweet fuck all.

The 15 free hours is not for the parent's benefit, it's for the child. It's not free childcare, it's early years socialisation and learning that children from low income households often miss out on.

And benefits is NOT equivalent to a working wage.

Dogs, one reason I took all my pension money out at age 55 was to get the 25% tax free (which went to my children for housing) but HMRC got 45% of the rest of it - lucky them. I hope they spent it wisely. And 55% of the balance went to my children for housing other than £1k I spent on a new laptop). My point is simply they keep changing the rules on pensions so do not assume the 25% tax free sum will always be available. When I set my pension up you could cash in at age 50 and without my consent the state changed that to 55 and now it is going up to 57. They change pensions rules left right and centre. I lost trust in them.

@Xenia

Dogs, one reason I took all my pension money out at age 55 was to get the 25% tax free (which went to my children for housing) but HMRC got 45% of the rest of it - lucky them. I hope they spent it wisely. And 55% of the balance went to my children for housing other than £1k I spent on a new laptop). My point is simply they keep changing the rules on pensions so do not assume the 25% tax free sum will always be available. When I set my pension up you could cash in at age 50 and without my consent the state changed that to 55 and now it is going up to 57. They change pensions rules left right and centre. I lost trust in them.

That was a fairly crazily inefficient way to take it.

The rules are you can either take a one-off 25% sum tax free, and then everything else is taken at your marginal rate for the rest of your life or draw down each year with the first 25% tax free.

But of course you also have a personal.allowance to consider.

The way I see it I'd

If you really* need to - for instance for a house or to pay off a mortgage, take that 25% lump. Problem is by doing this, it bevomes part of your estate for IHT (unless you gift it£

Anyway on the rest, take your personal allowance each year, tax free. I would only* draw down the amount extra on top I need to live on, the rest stays invested. So I'll not be paying much tax at all.

Indeed, I'd probably sell down another asset outside of the pension wrapper and use my CGT allowance. So that's 25k tax free under the current allowances.

The rest gets passed to my successor when i die.

@Xenia good point, they do change the rules every so often, but I don't think they'll do away with draw down completely. I know it's tighter now to try and discourage people from blowing it all on SouthSeaInvestmentsRUs and it may become stricter still but hopefully it'll be there in some shape or form. It does seem tight that people can't just take the lot out and buy a house but well that's tax for you.

And benefits is NOT equivalent to a working wage

Sometimes its more.

@TakemedowntoPotatoCity

UhtredRagnarson I could have written your exact post (except I've been here five years). Rents in my local area have also seemingly shot up by about 200-300 pounds over the last year. I don't know why, but it's worrying!

The same has happened in my area @TakemedowntoPotatoCity (we might even be in the same area, who knows?).

I think it's because high house prices mean more people are renting, for longer, and therefore the supply of rented properties has shrunk in relation to demand. Out of my DSS's big group of friends, all early 30s, only 2 have managed to buy, the rest are all renting.

DSS was only able to buy because he came into a 3-figure inheritance at 21. The other couple who bought lived in a house share until their daughter was 3, so that they could save a deposit. And they had 3 jobs between them.

Yep. I work with someone who does exactly the same. Because of the type work it is a TOTAL waste of time her being there. If she job shared (she did when she started) it wouldn't be so bad but on the 3 days she not in someone has to cover. Doing the whole job yourself is easier than covering half of it...

@DoomPoodle I looked up the cost of the prepayment certificate. Did you know you can pay by direct debit at £10.59 per month over 10 months? If you are buying one prescription a month (£9.15) and trying to save a little to save up for a certificate then a monthly DD would save you money now and look after your health.

@Waxonwaxoff0 so what your saying is my child doesn’t deserve 15 hours free for her benefit and socialisation... because I work and earn over 15k?

I know a lot of people who benefits are more than my monthly wage. Not to mention the people who cut their working hours so that they can claim the free hours, and more benefits.. because that’s how the system works unsurprisingly.

@TulisaIsBrill if you want to dump £50k into a charity let me know. I can advise you.

I'm effectively a philanthropy advisor.

I could direct you to a charity that would use that money to benefit (quick calculation here) around 5,000 women and girls AND leverage extra funds into the women community and voluntary sector as a result.

Leverage restricted for this theme and from international funders...