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

Sorry for typos.
I meant families with children are the ones that would find it harder to judge whether working more hours would be beneficial to them. I know they would be a few pound better off but trying to balance whether to spend time with children or work more hours must be difficult

A single person without children gets no work allowance so every £1 means their UC is reduced by 55p

Well unless they have health issues and are in receipt of LCW/LCWRA.

but their award will obviously be lower as it won’t include the child elements, it’s like comparing apples and oranges

Because of course you would work more for so little return, of course you would. We are paying our own way - we're both working, we both pay taxes, we both earn above what universal credit asks us to but on a low wage there is no incentive to work more. I could work 5 or 10 more hours per week, do you really think that will mean we're suddenly no longer receiving universal credit? We would have to increase our earnings by around £30k a year to reduce our UC payment to zero - it's not achievable for us.

@Justwonderingum a house (even with a mortgage) is a realisable asset if there is equity. Unfortunately if you sold your house and moved into rental you would likely not qualify for UC on savings rules. You would have to live on savings before you became eligible and then would be stuck because you would never be able to save enough for a deposit to buy in future.

Being eligible comes with costs that are not worth short term gain based on eligibility with dependant children. Especially where short term gain is based on 4 dependant DC with disability benefits thrown in.

In the longer term you will always be better off owning rather than renting and better off working as much as you can around practicalities of childcare.

Correct. And most clients I support working approximately 25 hours or more pay full CT with the exception of the 25% single person discount in relevant cases.

Home owners also get a higher work allowance on their claim which makes a bit of difference.
If you own your home outright or live with relatives and have kids you are really quids in on UC- you get the higher work allowance with no rent or mortgage to pay ( unless your relatives charge you rent ).

A claim with this criteria would be around £1050 UC not £2200. And that's basing it on the LHA for an area of London which is always vastly higher and not reflective of the average UC claim nor is having 4 children actually. When you say low rate DLA is that mobility or care component or both? Either way they wouldn't be entitled to the higher rate of disabled child element on UC anyway nor could a parent claim the carer element. You also didn't state the ages of the children on this hypothetical claim so the LHA amount would also vary based on the amount of bedroom entitlement they have (for this hypothetical situation it is the 3 bedroom rate) They could also be council/housing association which would be a different amount too. The child benefit would be £323 every 4 weeks. The lower rate of DLA for care would be £121.20 every 4 weeks.

So their total benefit amount would be in the region of around £1500 a month and more in the months the child benefit and DLA were paid twice. And slightly more if the lower DLA rate for mobility was included too.

Also notice you've mentioned equity a couple of times. It isn't clear but are you aware that the amount of equity in a home is irrelevant if the claimant is living in the property and doesn't affect their UC in any way apart from them not receiving the housing element? I have around £125k of equity in my home and receive UC.

You could work 10 hours more per week and reduce the amount of UC you receive. But you don't because you think it's not worth it. What would you do if there wasn't a UC payment available to you?

My biggest worry is that because of people like you, who could work that bit extra, vunrable people who really need UC for support will eventually miss out. We can't keep supporting people who can work but choose not to. Government will have to cut the welfare bill eventually....

Would you work more if it meant you were taxed even more? Doubt it.

The fact is that most people will do whatever is of the greatest benefit to their own children; time or money.

Where have you pulled that from?

My children would benefit hugely having me home full time.

They also benefit hugely from having a roof and food

Yes, literally everyone working more is taxed more, that’s how taxation works. You still have more in your pocket than if you worked less.

Interested in your view that it's about "divide and conquer". If I work 40 hours a week, am I not permitted to think that if you don't, then I should have a better life? you expect the same modest standard of living? If I work and you don't, I think I should get more than you.

And actually, I also think that if you can't meet the costs of your own life, then adding kids into the mix, is condemning them to another generation of poverty.

Yes and you make a decision on what is, the greatest benefit to them.. If you think they are better off with you at home for 10 extra hours a week and free school meals, etc etc rather than you working 10 extra hours for no discernable benefit you will choose in order to benefit your children, not A. N Other taxpayer.

I know you’re not asking me but my view is that people who are unable to earn their own money should not have to live like paupers. I don’t begrudge those too ill to work, or their carers, a nice standard of living.

I think choosing not to work shouldn’t be well rewarded. Which it isn’t currently anyway.

And I think if we didn’t let welfare recipients have children, we’d soon have a massive shortage of people willing to take on lower paid roles. So it’s a bit of a non starter to suggest only self sufficient folk should procreate: not to mention those that find a need for welfare AFTET the creation of their families.

And your kids probably arent going to inherit the house (the value of which is basically at best going to be flat in real value terms as the uk housing ponzi scheme is slowly collapsing now)....
It's going to be used (correctly? I dont know anymore tbh) to pay your carehome fees..

While the person who worked part time and claimed HB occupies the room opposite you which is fully funded by the state...

It does beg the question what's the point?

We make good money (over 250k gross combined) and find ourselves asking ourselves wtf the point is anymore... We are seriously researching emigrating now and exploring job transfers in anticipation of reform