Universal Tax Credit query

[equinox]

Hello all you clever ladies

Sorry I don't havve time to trawl through on the above. What will it mean in practise and when is it coming in place?

Currently earning c. £5k a year self-employed with one child aged 5 and receive sufficient WTC/CTC and child care element to get by.

No rent as home owner with tiny mortgage.

Will this mean once UTC comes in I will be worse off if so would somebody kindly explain this?

Thank you so much in advance of your kind help people!

Really hard to know at this point and very much depends what you factor in.

For example we're all getting a higher tax free allowance in april, however VAT is going up to 20%, so in reality I won't be any better off as I pay a very tiny amount of tax on my salary and my biggest outgoings are petrol to work (which has VAT and duty going on it)

Only think I do know for certain is that child care element is going down to 70% from 80%. So you'll be paying more for that unless you can juggle it about so family/friends help you more with school pick ups and holiday cover.

Overall you're not meant to be worse off working (haha - like I said it depends what you factor in to that calculation), but they are reducing housing benefit etc (at least in real terms), so whether it be in real terms or actual terms I'm not holding my breath to be any better off...

Much of the detail for universal credit has yet to be defined.

But the principle goes like this. Each applicant will get their benefit value assessed. For arguments sake let's say that's £1000 a month.

That's what you get.

Now as you earn more, they will take 65p for every pound you earn from your benefit. So you earn £1 more, in your pocket you should have £1.35.

This will have to be managed monthly online like you would your own bank account.

This will replace all the CTC/WTC/HB/IS/JSA/CT benefits.

If the govt are to be believed, noone should be worse off but it will remove the barrier where someone is worse off by working or refuse to take a payrise/promotion because it affects their TC's.

But UC are a long way off yet and naturally, the devil is in the detail.

£1.35 in my pocket? That's a laugh. You're forgetting the deduction of income tax and national insurance on the extra £1.00 I earn.

So lets say I get 78p net of the £1 I earn. Then deduct the 65p that's 13p max I will be getting for every extra £1 I earn.

So then let's factor in the 20% VAT rate coming in (plus duty on petrol) not to mention inflation and increased prices on everything...

I may appear to be marginally better off, but in reality of course I will be worse off!

Oh and they're reducing the child care element of CTC to 70% from 80%. So another 10% there I'll be paying for the privilege of working

"So another 10% there I'll be paying for the privilege of working" - be thankful that there is any assiatance at all. Many people pay their own childcare for the children they choose to have rather than rely on others to pay it for them.

If there was no assistance I wouldn't be working. I am only ever so marginally better off working. Without help for childcare costs I would be worse off by working.

And they're going to reduce my child care help by 10% which I then have to pick up so that means it's almost double in real terms for me.

I already pay some 10% of the total income I get on childcare (including all WTC, CTC & childcare help and my child benefit) plus some 12% just in petrol to get to work.

My sister moans at how much child care costs, but she manages to pay it all out of her part time income, buys new clothes whenever she fancies, goes out of an evening and she has her husbands full time plus overtime to cover everything else.

Thank you so much ladies I appreciate the replies and I wish us all the best with it once it does come in place!

Cheers.

They are going to be a lot stricter on the self-employed. They will be assuming that you're making a profit enough to get the min wage. If you don't work enough hours, they will expect you to seek work and fulfil all the conditionality requirements which are given to all unemployed people.

australiashaped - is that true?

I know of a few people who are self employed but only work a couple of hours a month but tell tax credits they are working 30+ hours a week to get the premium.

It's on p. 71 of the universal credit document theredhen -

"Some self-employed people under Tax Credits report very low levels of income.
We know that in starting up a business that it can take some time before it becomes profitable. But once established we would expect to see a reasonable income from the business activity. So for Universal Credit we are considering introducing a floor of assumed income from self-employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported. For those self-employed people who engage in only a few hours of activity, and do no other form of paid employment then we will expect them to engage with the conditionality requirements as set out in Chapter 4."

Thanks for that australiashaped.