Please read if you want tax credits explained!

[CarrieLouise25]

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!

£1300 worse off here, this will make a big difference to us too

I'm £1400 a year worse off, according to the calculator upthread. We are, not to put too fine a point on it, screwed.

floatyflo

I don't know if this helps you, but you should have elements made up of:

Basic £545
Child 1 £2780
Child 2 £2780

Then 17500 - £16105 = £1395 x 48p = £669.60

Total elements £6105 - £669.60 = £5435.40 (£104.52 per week)

I don't know if this is 100% correct, as the tax calculations are a head scratcher, but this is just what I'm going on. Also, I can't see your award and which elements you've been awarded etc.

Then April 17, it looks as though they remove the Basic element.

If you don't get WTC and you're children are at school, then you can claim for free school meals I think.

Excellent point OddBoots. Maybe it wasn't intended! As usually when they report these things after via BBC or similar, they tend to offset what you've lost with what you've gained. I can't see anyone anywhere suggesting that if WTC have gone for you in this budget, claim free meals etc

according to that I will be worse off by 2 pound 60 . I bloody hope so.

CarrieLouise What about the change to income disregard threshold decreasing from £5000 to £2500? When will that be introduced? Hopefully not April 16, because we've earned a lot more this year (all paid towards debt, however) and that will mean we'll have to pay back all of this year's tax credits! Hmmm...

Hi MissBeans

Sorry to show you this, but it is April 16:

Income rise disregard in tax credits – From April 2016 the amount by which a claimant’s income can increase in-year compared to their previous year’s income before their award is adjusted (the income rise disregard) will be reduced from £5,000 to £2,500.

£2114 worse off here. I've been trying for ages to get a new job. I can't get anything better paid than I'm on now, at least that also allows me to look after DS by myself.
What the actual fuck am I supposed to do? I'm just lucky that DS's dad pays a decent amount of maintenance so I can keep a roof over our heads and food on the table.

Hang on though, the BBC calculator says I'll only be worse off by £122. The original figure came from the Independent one...which is more reliable?

crosses fingers and really hopes that someone says BBC...

With pupil premium being £935-1300 and school meals themselves being another £350-400 per child per year with prescriptions and other stuff on top this sounds like it will cost the state more than it saves.

This can't be intentional or they would be crowing about how the children are cared for while they 'make work pay' for the parents.

My thoughts exactly OddBoots!

BBC calculator also vastly different for me ....

I earn 7839 per year 16 hours per week with 3 children single parent can anyone tell me how I will be affected thankyou

I think that the Basic Element of £545 might be protected for those already in receipt of it. Come April 17, it looks like its stopped for new families.

Here's a big HMRC document on all the changes:

www.gov.uk/government/uploads/system/uploads/attachment_data/file/443285/HMRC_Summer_Budget_Overview_Version_4_0.pdf

That calculator in the Independent only measures WTC not Child Tax Credit.
Also v suspicious that the childcare element hasn't been mentioned at all. Makes me think that they have hit a realisation that the 30 hr policy has got major issues and so are still trying to fine-tune the details of what our childcare 'sweetener' is going to be. From what I heard, the 30 hours free was only going to apply to households over £50k anyway.

Hi lindsayville

Here's how I would work out your TC's.

WTC
Basic £1920
Single Parent £2010
Total = £3930

Old one: £7839 - £6420 = £1419 x 41p = £581.79

Meaning your WTC Award would be £3348.21

New one: £7839 - £3850 = £3989 x 48p = £1914.72

Meaning your new WTC Award would be £2015.28

Your Child Tax Elements should be:

Basic £545
Child 1 £2780
Child 2 £2780
Child 3 £2780
Total £8885

You should get the whole award for this as income can be up to £16105.

So total worse off is the WTC and that looks like £1332.93

Sorry

Actually neither calculator accurately shows what we currently receive in WTC/CTC/childcare element combined this year....

Hey guys, I just worked out lindsayville's calculations manually at £1332.93 above, and I've just done the BBC calculator for her as well, and it came out bang on, so go with the BBC one!

That's what I found, Quodlibet.

Thanks not good news at all!

The calculators are basic, and work out the difference between the 41p to 48p per pound over £16105 threshold for CTC, and they work out the difference between 41 to 48p per pound over the new £3850 threshold for WTC.

They show what you will lose under the new calculations, but they can't calculate what you currently receive now. Only what you'll be worse off by.

Think that's it anyway...

Hi lindsayville,

I know . We're in the same boat too sadly. Quite a big dent in what was already a struggle.

I've had a go at figuring it out manually.

I would keep the whole CTC award as I'm under the threshold of 16105.

I currently only receive 927pa WTC and with the new system I this would be reduced to 0.

So down 927? The calculators were giving me 1600, where have I gone wrong?

Single parent to 1 DS, 40 hours p/w, earn 13900.

I have done several of these calculators now and have different results after putting in exactly the same in each one.
They range from a loss of £1.500 to a loss of £130 so a huge discrepancy. I'm staying positive and holding out for the £130