AIBU to question whether UC rules create incentives to limit earnings?

[Justwonderingum]

Unpopular topic, I know. But I'm trying to understand how UC works. It looks to me like there is a huge gap where you are much better off limiting the hours you work, paying yourself less from your company, or even over paying into your pension as you can claim the difference in UC. Also claiming UC means you pay less for many other things, and will include free school meals soon too. So AIBU to wonder if this really is the case or are these loopholes closed? A quick play seems to suggest that even on a household income of £70000 can claim over £1000 a month, assuming 2 plus kids,including one with lower rate DLA

@cadburyegg how much of the £500 was UC and how much earnings?

Entitled to is not always accurate. It’s better to do the calculations yourself. There are various UC Facebook groups which advise this

Should we not question a system that appears to disincentivise working? Does it not worry you? Do you not worry about where taxes are going to come from if people realise that they’re better off not working? Do you think there’s a magic money tree growing somewhere?

It concerns me.

Oh yes you’re right. I was going on her entitlement figure but she was way off. If they get their full rent covered they’d get £884/month in UC.

my mistake.

If they didn’t work, they’d have much less in their pocket at the end of the month.

£5970.74 wages + UC
£3447.52 UC only

It doesn’t de-incentivise working though. The more you work, the better off you are….

So You’re having a go at families earning £70k claiming DLA?

DLA is not means tested. David Cameron claimed it for his son. Leave disabled people alone. They deserve to have this benefit to pay for the things that they need that NT kids do not!

Yep.
If you are on UC and looking for work, you get no work allowance. So you get about £100pw to live on, and if you get a little zero hour/part time job, you lose 55p for every pound you earn.

UC works on a taper system, not a cliff edge: it’s unique to each family. In order to be £10 “over the limit” your earnings would be much more than the £10 you award was reduced by.

From a personal perspective it makes sense to work less, more time with kids, less childcare and just get the money anyway. As long as you rent. That's from an individual perspective. Does not make sense as a society. But realistically with rent at £1400 what is the minimum a family of 6 can live on, including food, clothes, travel, incidentals eg car repair etc.

You don’t lose 55p, you’re awarded 45p for every £1 you earn. You’ll be better off as you have your £1 wage + 45p UC

Not the point of the thread but what does ‘NT kids’ mean?

Are people really this dense?

If this is true, why dont you do it?

Be mad not to.

Hang on...

I agree. When the benefits bill is higher than what the treasurey receives in income tax then we are on a slippery slope. We can't carry on like this.

www.msn.com/en-gb/news/other/welfare-costs-outstrip-income-tax-as-labour-faces-fiscal-test/gm-GM2B8023FA

I’m not sure how many times you need to hear that the taper system means that th more you work the better off you are.

Of course you could choose to work 18 hours on NMW (the minimum you can earn without being required to work search) and have more time with your children, but you would have less money than if you worked full time.

Should probably start means testing pensions then shouldn’t we, given that they’re the biggest portion of the welfare bill

Sorry, I mean you lose 55p in UC or every £1 you earn.

@MyTrivia I am not sure what your point is.?

Yes, I understood what you meant. And rightly so. Why would you keep your full UC and have your wage.

the point is, you’re still better off working as you have £1 from your wage and 45p from UC, instead of just £1 from UC.

You are a bad actor OP. And you know it.

Yep, you are always better off working in UC, despite what others say

@myluckyhelper I don't think you would have less money. With that amount of UC would be on equivalent of over 100k or are you telling me you are entitled to UC at more than £100k?

I get UC top ups because of working P/T with an autistic child on DLA. What you aren't taking into account are all the extra costs. My child won't eat free school lunches. They have various therapies I have to pay for. They have sensory issues meaning clothes cost significantly more. I could go on and on...

I would be hugely better off financially working full time.

I’ve explained quite clearly already how you would have less money if you didn’t work.

“If they didn’t work, they’d have much less in their pocket at the end of the month.
£5970.74 wages + UC
£3447.52 UC only”

From being on a couple of UC fbpages, to some extent, yes it does. There are the people that don’t understand that earnings over a certain level aren’t just deducted £4£. The more I earn, the more money I have every month, some people think they are working for money they could just get from UC.
i totally get that if you need that safety net of all or the bulk of your rent being paid by UC, you would never take the risk of earning more.
There is also the consideration that many people will never have a job that pays more than NMW, so there is no reason to stay in a job when you have young children or consider the impact of gaps in your CV or what could impact career progression.
Am incredibly grateful that Tax Credits and UC have been available to me and my children when life hasn’t gone as well as hoped.