To think paying tax on jobseekers allowance is just crap

[20thcenturygirlwithherhandsonthewheel]

I was made redundant a few months ago. I have worked just under 30 years and never claimed any benefits before. DH and I have always saved to make sure that we have money aside just in case of emergencies (especially as housing benefits don’t pay the mortgage), so we have over £16k in savings and can’t claim anything means tested.

fair enough.

the only benefit I could claim when unemployed was contribution based jobseekers allowance: a massive £93 a week that I could only claim for 6 months.

thankfully I was only unemployed for 8 weeks. But to my surprise I’ve just recieved a letter from HMRC telling me that the paltry £93 a week was taxable. So really; probably will end up about £70 a week.

really pissed off: being putting money in the kitty for 30 years but getting so little when we needed it

Well I'm guessing you chose to live your life the way you have for a reason. If you genuinely think it's a sweeter deal to spend without saving, and to rent, so as to be potentially eligible for more benefits in the future, you probably still have that option. Most likely you wouldn't choose that because even though you're not eligible for much in the way of benefits, you're still "winning".
Fwiw, I didn't realise you could even claim JSA if you have any savings, so your post has made me realise the system is "more generous" that I thought!

This. If you'd happened to start your claim at the start of the current financial year, you wouldn't pay tax on £93 a week. You're effectively still being taxed for what you earned before you lost your job.

ETA - or it's become taxable since because you've got another job that takes you over your tax-free allowance for 25/26.

I'm surprised the pp didn't know this was an anonymous forum.

My husband and I worry about this. He has a dry period from work every April- June and when we were renting we always had the safety net of 'benefits will pay if we really cant'. We never even applied because we dodnt need it but knowing it was there was enough to just paper over the cracks from our worries. Now we own a house and have 20 years left on the mortgage, wow. every year we have such a worry because there is no help. if work was bad for even just a few more weeks we would be done for. Who has enough savings to pay the mortgage and bills for more than 2 or 3 months? Not any other working class person I know.
It's given us the motivation to pay down our mortgage as fast as we can though, almost a year down already.

I used to work in Housing benefit and you are exactly right. I used to get loads of people complaining about this. Reality does not match up with what they have read in the newspaper.

You don't get lots of money on benefits.

No you have money, so you receive less than someone who doesn't, that seems 100% fair. Actually, of course, if your savings ran out you would be re-assessed, because what benefits you qualify for is currently limited by your savings, which it wouldn't be if your savings were gone.

YANBU. I don’t think it should be taxed either, as you’ve paid in far more than you have taken out.

I would hardly call having £16k in savings being in a position of “privilege” either, it’s just not being utterly destitute, which sadly seems to be the where the bar is set for a lot of the country these days.

You'll only pay tax on your JSA if your income exceeds £12570 a year. Just the same as any other income. Why would income NOT be taxed if the total exceeds £12570?

What confuses ME is why ALL income over the threshold isn't taxed.

The benefit system is set up for people who know how to play the system. We were the same, my husband (and I) have always worked but when he was made redundant we were shocked by how little he was entitled to.

Same with care home fees, if you have never saved you get it for free, if you have they take it off you. It's crap.

Yes, I didn't bother with it as I had already earned the tax allowance when I was made redundant so wasn't really worth it, I had a DC under 12 so didn't matter about the NI credits. I wasn't in hardship and the whole process seemed more trouble than it was worth.

She has money because she WORKED for it, it didn't just land in her bank account!

I would not have expected to pay tax either!

Some people do have to claim it though, even if they have savings because of the NI credits. The contribution based JSA doesn't matter how much savings you have.

Its not unreasonable to pay tax on your income the same as everyone else , regardless of the source . After all it’s the tax that we all pay that enables the welfare system to exist !

And yet people on means tested benefits often get far more and don't pay any tax assuming they are just on benefits of course.

I was in a similar position to you & claimed for 5 weeks at beginning of the year , if you claim for the entire 6 months depending what you earn for the other 6 months of the tax year it may be tax exempt , but in short I knew it was taxable , also it’s a massive pain in the arse visiting job centre weekly, hence why I didn’t bother for long .
But I totally agree that you’re entitled so why shouldn’t you , too many people on the fiddle , if you can legitimately claim then you should

@XenoBitch I used to work in benefits . They are supposed to be a safety net but unfortunately many claimants see them as a way of life . I temporarily transferred to UC during Covid . I spoke to many people who had never had to claim benefits before . They were shocked how little help they were entitled to .

What are you saving for? At the point whereby care home fees enter the equation that’s about the only thing you can use your savings for, we call ours the care home fund. Savings are for a rainy day but it seems that some are reluctant to put the umbrella up when the heavens open.

It’s frustrating that for short term job seeking conditions home owning and savings are given so much weight in benefit assessments. Taking the 6 month limit approach and paying housing benefit and universal credit at the standard rate before moving into means testing would be so much less disruptive to the household and prevent downward spirals starting.

Particularly as a lot is taxable so where income jumps back up again a large portion is later recouped.

I have also worked FT for 30 years and would be pissed off too.

what am I saving for? I’m 46, I’ve got a long time until I need a care home.

im saving for lots of things: firstly, just a safety net if anything goes wrong (ie a serious accident, illness, redundancy), work to be done to our house (it’s old), to be able to retire at a reasonable age (I cannot see me ever receiving a state pension: it will only be those who have no other provision who will recieve it by then), to put my child through uni, a deposit for my sons first house,

£16k in savings is not a massive amount of money: it’s not untold riches.

Some people know how to game the system. I know a few of them.

and some, just work minimum hours because as soon as they work more, it really messes up their benefits

Honestly op it’s not worth having over 6k in savings if you lose your job - my husband was made redundant and he got about out like 15k so we were entitled to very little obviously- however we had a lot of debt that we’d been struggling to pay off (10k) we battled with paying it off with the payout and claiming universal credit or using the money to live - we took the risk and paid the credit cards off and claimed
we only got 2 months of universal credit in the end as he got a new high paid job fast!

but we came out of it all debt free in the end and which is a privileged place to be ! If we decided to keep the money and not claim we would be way worse off now.

If a person is made redundant

A person can claim contributions based job seekers allowance for a certain time period
During this time it is NOT means tested
Redundancy pay is not taken into account
National insurance contributions are also paid during this time when a person is not working
I had to attend the job centre once per week in person & confirm my job searches

The money is only means tested if a person is unemployed for over a certain time period & this is confirmed by the DWP

I was glad of the payment, it is scary being made redundant. The bills do not stop coming in.

I was fortunate to gain new employment within a short time period

Personally I think it's high time the savings threshold was increased massively.......it was anything above 6k when I had to claim benefits over 25 years ago. Which is fuckall these days. Between 16k and 26k would be far more proportionate.