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

So you rather relay on the state / the other taxpayers than actually paying your own way?
Why shouldn't money you earn be spent on things like childcare & getting to/ from work? Such entitlement, that's the problem.

Perhaps there needs to be more education around this then as doing this has made him worse off financially. The old income support system would absolutely have led to a loss of benefits at a certain number of hours. UC doesn’t. But to say that someone who works in benefits doesn’t know this is pretty disheartening, what sort of advice are they giving out if they don’t understand the rules.

I think the savings cap is wrong

esp if say trying to save for a deposit for a house so thy can stop renting an means uc save thousands in rent paying

maybe a bank account like an isa can be used to encourage saving for a house deposit and only used for that

how are people meant to get on the property ladder if not allowed to save over £6k or even £16k

some may argue and say if savings don’t need uc - equally they save it and don’t spend it on - tv - nails - fags - tattoos - drink - drugs - etc like some other may do

Although 69% agree with her so....

To be fair, they did they the worked in benefits, not work.

But agree about income support and I believe tax credits was the same.
16 hours was the cap- absolutely ridiculous rules on those benefits.
16 hour working cap and unlimited savings - what kind of an incentive was that to work?!

You’ve lost me on the first sentence sorry 😂🙈

Agree about the poor setup of legacy benefits, which I’m guessing was part of the reason it was reformed. I just wish more people knew that UC worked differently an didn’t keep claiming they know multiple people who deliberately keep their hours under the cap to get benefits 😭

can someone please advise if I could also be entitled to UC as single parent with 2 kids working full time and taking home around £55k, this is net around £3755, I get cb for the kids of £170 a month and was previously told that I am not eligible for any other support.

i am a home owner but honestly struggling to meet monthly costs as even school lunch is around £150pm for children and is compulsory at their school plus transport of at least £120 for both to get to school, in addition to my own transport costs to get to work etc

I feel I must be going wrong somewhere

Put it into Entitledto.com, but if you have savings or a mortgage then you probably won't

Trying to work through this logically.

I get £1 U.C.
If I start working ...I get to take home £1 wage + 0.45 U.C = £1.45
If I don't work I stay at £1 U.C.
So by working, I gain 45p U.C, by not working I stay at my original £1 U.C.
Therefore by working, I lose 55p U.C. However, overall my household gets £1.45 in my pocket. I therefore am 45p better off than I was on my original £1 from universal credit.

This is of course a very simplistic calculation which doesn't take into account the amount of time and effort it takes to make my household 45p better off.

Working has made me better off by 45p but there are other considerations like childcare, transport to work and the actual time and stress from working as well.

Yes, you’ve got it right.

Of course if you don’t think it’s worth it, you can choose to do less and have less. But that doesn’t negate that the more you work, the better off you are with UC (for the vast majority of people, of course you’ll always manage to find an exception I’m sure).

Childcare is largely subsidised through UC (although the system for this is executed poorly and causes problems for lots of people, I much preferred the tax credit system for helping with childcare).

As I’ve said to someone else, I could have survived on p/t wage + UC but I still have more in my pocket working f/t. Some people might deem the extra I get “not worth it”, but that’s a them problem really - I very much believe you should support yourself as much as you can, and when they safety net of UC inevitably disappears as the children grow up, you need to be able to stand independently. And the more of my money I earn myself, the bigger my pension pot is building, which matters to me.

They absolutely do. I work with people who will only work part time because it’ll affect their benefits. They also get out of mandatory overtime at Christmas for the same reason.

It's not that simple. You also get a work allowance with children so no deductions for the first £427 income. If you get no help with housing due to having a mortgage you get a higher work allowance of £684. Only earnings after that have the taper taken off.

They are misinformed, or just don’t want to work any more hours and are using that as a reason /excuse not to do overtime.

Some people are content with less money.

Here we go again.

They’re daft then. Working more hours doesn’t reduce their income. It increases it with UC.

If both kids born after April 2017 then your total UC before deductions for earnings would be £1032.78 per month. This is made up of single adult element and 2 child elements.
deductions would be calculated from 3755 ( earnings ) minus work allowance of £710 = £3045 multiplied by 0.55 = £1674.75 deduction.
As deduction is higher than original award there would be no UC payable.
This could be different if either of your kids are disabled.

I should add I did the calculation as if one of your kids was born pre April 2017 as that would give a slightly higher award before deductions, but still would not qualify for anything. Sorry.

Do you get maintenance from your children’s other parent? That could be a game changer.

Not this bollocks again 🙄

I don’t think so. I’m also a single parent of 2 kids and a mortgage, I earn quite a bit less than you and i get £192 ish a month in UC. My childcare costs are quite low though. Do you have high childcare costs as that might make a difference?

You can always apply, there’s no harm in it and if you aren’t eligible you just won’t get anything.

Children are both young teens so no childcare warranted, pursuing child maintenance as feel very much the squeezed middle

Yes there’s absolutely no justifiable reason that you aren’t receiving child maintenance.

Do you have any solutions for that?

Stop people on universal credit being able to claim private rent and see how that goes?

Everyone agrees more social housing but as nothing is happening there and hasn’t for years what do you propose?

It also doesn’t take into account that most people working will have to pay tax and national insurance on extra earnings I.e. (they have used their tax free allowance) so they are not 45p better off. That is before any costs of extra work such as petrol and childcare.

UC Is calculated on net earnings, so tax and NI (and my pension deduction) are accounted for.