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Original poster

Please read if you want tax credits explained!

190 replies

CarrieLouise25 · 08/07/2015 18:56

Hi everyone,

Firstly, I'm not an expert, but I am affected by these changes, and I've done a lot of research into the changes, and I'm hoping to help those who need help.

  1. There was a very confusing income threshold reduction from £6420 to £3850.
  2. There is also a higher rate per £1 reduction from 41p to 48p.
  3. The Basic Family element will disappear.

This is how this works (only for Working Tax Credit). Imagine a 1 parent family with 2 children, working 30 hours a week. Earning £12,000 a year.

Total WTC Basic Element: £1960
Total WTC 30 hours element: £810
Total benefits she could receive = £2770

Now before, the threshold was £6420 and 41p in every £1 reduction over the threshold. So this would be:

£12,000 (wage) - £6420 (threshold) = £5580 x 41p = £2287.80

So total possible WTC = £2770 - £2287.90 = £482.20

So her total WTC = £482.20.

Under new rules, the new threshold is £3850. So the new calculation is:

£12,000 (wage) - £3850 (threshold) = £8150 x 48p = £3912

So under new rules, no working tax credit for this lady. Total loss £482.20

The family element is disappearing, so this is another £545 loss.

With Child Tax Credit, the elements are £2780 per child, so she should still get £5560 for her children.

Old rules:

Wage £12,000
WTC £482.20
CTC £6105

New rules:

Wage £12,000
WTC £0
CTC £5560

Worse off by £1027.20

Hope this is helpful. I'll post some more calculations soon if you like!

OP posts:
SurlyCue · 08/07/2015 20:20

There really wasnt much said about the childcare element was there? That makes me suspicious.

How do they expect people to work when childcare can be more than you earn? Confused

SailorsWifesLament · 08/07/2015 20:24

I'm just curious because I will miss out on the 30hrs as my son starts school sept '17.

ElizabethG81 · 08/07/2015 20:26

I had a query in another thread about the childcare element. Will it still be available for the "extra, non-state approved" children? Or will women who have an unplanned third child basically be forced to give up work? (I say women, because I think that's more likely to happen).

OddBoots · 08/07/2015 20:32

So am I right in thinking that the fictional family in your first example would become entitled to free school meals/pupil premium and/or 2-year-old early education funding?

eatyouwithaspoon · 08/07/2015 20:32

Im confused i tried that calculator and it said i would be no better or worse of claiming tc for 2 cildren joint income of 23.5k (one f/t one se) Is that right?

floatyflo · 08/07/2015 20:37

I'm still unsure on how this will affect me.
They don't like to make it simple do they?

One sahp.
One wahp 37 hours. Gross income 175000.
Two children.
Currently receive 460 four weekly CTC and 0 wtc.

What will the new changes mean?

OddBoots · 08/07/2015 20:38

Have you added an extra '0' floatyflo?

floatyflo · 08/07/2015 20:42

HA! Yes I have. God I wish!

I meant 17,500.

Grin
BippityBoppity · 08/07/2015 20:45

£1350 worse off. Dunno what the fuck I'm going to do.

Just so utterly sick of being poor

TwilightMad · 08/07/2015 20:48

I've just spotted this online so it looks like if you already have a third child and your circumstances don't change too much within a given time period then you won't be affected.

Please read if you want tax credits explained!
MissPricklePants · 08/07/2015 20:48

1484 worse off. Single parent to 1 dd. I work 33 hours a week.

yestheyhavethesamedad · 08/07/2015 20:50

I'm going to be just over £1200 worse off, and if they don't still pay 70% of childcare I'm going to have to give up work because at the moment literally half of my wages pay the other 30% of childcare . Am actually really scared now

MissPricklePants · 08/07/2015 20:52

I don't know how I'm going to manage :-(

YouCantBeSadHoldingACupcake · 08/07/2015 20:53

£1164 worse off, Sad

kappadelta · 08/07/2015 20:56

Floaty - the rules for those who just receive CTC are different to the WTC ones.
I think you will be marginally be affected by the CTC taper rising from 41 to 48% on earnings over 16105.
I hope this helps.

lougle · 08/07/2015 20:58

You're not quite right there, CarrieLouise. You say 'family element has gone so that's another £545 lost' but it is only £545 lost if someone is eligible for the whole tax credit award.

RolyPolierThanThou · 08/07/2015 21:02

It's lunacy. . I've just done the sums on two incomes. On my normal gross annual salary I would be 1140 quid worse off.

But I'm sure to take maternity leave soon, so If I put in what my income will be this and next tax year due to receiving statutory maternity pay for half of this and half of next tax year (so lower by a significant amount. About 5k difference) I would be 1180 worse off. So the less I earn the harder I'm hit. How is that right?!

Original poster
CarrieLouise25 · 08/07/2015 21:03

Hi OddBoots,

Because the lady in the first example receives Working Tax Credit she cannot get free school meals. Free school meals only happens if you are on:

Income Support
income-based Jobseekers Allowance
income-related Employment and Support Allowance
support under Part VI of the Immigration and Asylum Act 1999
the guaranteed element of State Pension Credit
Child Tax Credit (provided you’re not also entitled to Working Tax Credit and have an annual gross income of no more than £16,190)

I'm not sure about the other benefits you mentioned, I don't know.

OP posts:
HappyGoLuckyGirl · 08/07/2015 21:07

I just put in the calculator how much of a raise I would need to sort this mess out. If I bump my wage to 17000 I'm 791 worse off. Then if I go up in increments of 1000 the worse off I become!! A wage of 22000 is back up to being 1400 odd pound worse off.

How the FUCK does that work then?! Angry Angry

SurlyCue · 08/07/2015 21:12

Its a real mind fuck trying to work this all out. Why are people worse off for working more? Confused

ElizabethG81 · 08/07/2015 21:13

It would be calculating your worse off/better off figure as if you were currently on that salary - e.g. if you were earning 22k in 2015/16, then you would be worse off by £1400 in 2016/17. To work out how much better off a pay rise would make you you'd have to compare the figures from two different salary examples.

floatyflo · 08/07/2015 21:15

*ElizabethG81

floatyflo - this calculator - www.independent.co.uk/news/uk/politics/watch-budget-2015-live-iain-duncan-performs-double-fist-pump-during-george-osbornes-budget-but-it-has-only-made-him-more-enemies-10375699.html - says you'll be worse off by £1881 pa*

Floaty - the rules for those who just receive CTC are different to the WTC ones.
I think you will be marginally be affected by the CTC taper rising from 41 to 48% on earnings over 16105.
I hope this helps.

Oh no, so which one is it?? Two v different answers Sad

HappyGoLuckyGirl · 08/07/2015 21:17

I don't think the calculators paint a full picture. I just put my details in the one on the telegraph site and its telling me that this year my grosa income is around 17500 which is incorrect.

With tax credits (including the childcare element) my income is about 24000. I get 200 pound a week tax credits all in and just shy of 14000 a year salary.

eatyouwithaspoon · 08/07/2015 21:19

Just tried the 2nd calculator 2340 worse off. A kick in the teeyh for a working family. I just dont know how we will survive. This will tip us into poverty and as the main wage earner is in a public sector job no hope of a pay rise either.