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!

the IFS have just confirmed that they also think the budget will hit millions of working families .

If you work 32 hours a week at the new £7.20 you get a wage of £11980.80

Your elements should be:

Basic £1920
Single Parent £2010
30 hours £810
Basic £545
Child 1 £2780
Current maximum £8065

New way £11980.80 - £3850 x .48 = £3902.78 reduction so new TC's should be £4162.22

Old wage: £10816
Old TC's: £6262.64
Total: £17078.64
(haven't factored in Tax and NI)

New wage: £11980.80
New TC's: £4162.22
Total: £16143.02
(haven't factored in Tax and NI)

So I'm fucked I'll either have to stop working. As I can't afford childcare, or, well I don't really know what.

Thanks for your help Carrie

Hi MrsRaegan,

Sorry . We're screwed as well. I know that doesn't help.

Are you able to get the childcare element of the tax credits? I don't know a lot about it myself but if you pay an approved childcare person/place you can claim some of that back on your award, up to £111 per week.

Hi I have a question. Does the new lowered £20,000 household income cap apply to us working households claiming ctc?

If so we will be severely limited with what we can claim. 17500 ft income plus 2 children's child benefit puts us almost up to that limit.

Thanks to all posters. This thread is the only help I've been able to find.

I work full time, 3 kids and DH is registered disabled. Im going to be £2,200 a year worse off...............

Tee - the £20k cap is the maximum a household can claim in benefits - it's not about your household wages.

Thank you babyroobs - you have put my mind at rest amidst all the uncertainty! So hopefully it won't be as bad as I thought. Cheers :)

I earn £15,300 30 hours a week. Single parent.
Dd off to uni in Sept so obviously no payment for her.
DS 16 staying on in ft education.

Any ideas what I'd get?

I'm not 100% sure, but if you're on £15,300 with 30 hours and one child at home, this is what it could look like, if you are entitled to WTC and CTC.

Basic £1920
Single Parent £2010
30 hours £810
Element £545
Child 1 £2780
Total = £8065

£15,300 - £3850 x .48 = £5496

Total TC's - £2569

Thank you ,Carrie
Currently get £450 a month with dd so was expecting a big drop.

Will it affect childcare claims? Im confused.

I don't think so, childcare hasn't been mentioned, so hoping that element is protected at least.

Another one asking for help...single parent 16 hours worked last year earned £13500ish and I pay £110 each week childcare (2 children afterschool club and toddler at a childminder). Was hoping to increase my hours to work another day when 2 year old is 3 next year/gets the 15 hours funding. If I do this sooner childcare bill still goes up though before then?

Childcare is not protected - it will be cut by taper and threshold changes just the same as the other elements.

Cleo

Cleo, what I meant by protected was the childcare element is still available. It doesn't change the workings out:

Going on the £15,300 with 30 hours and one child at home, this is what it could look like, if you are entitled to WTC and CTC and Childcare.

Basic £1920
Single Parent £2010
30 hours £810
Element £545
Child 1 £2780
Childcare £3640 (£70 a week rough example)
Total = £11705

£15,300 - £3850 x .48 = £5496

Total TC's - £6209

Whichever your elements are above, the wage minus the £3850 at the new 48p is the same, so that's the same amount that gets taken off.

Hi carrielou2007

Under current rules you should be on around £13966 WTC and CTC

Basic £1920
Single Parent £2010
Basic Element £545
Child 1 £2780
Child 2 £2780
Child 3 £2780
Childcare £4053.80 (£77.95 per week)
Total £16868.80

Wage of £13,500 - £6420 x .41 = £2902.80

Which equals current £13966

New rules will mean:

Wage of £13,500 - £3850 x .48 = £4632

New credits could be: £12236.80

These will take affect from April 16.

I hope this helps?

I wish I'd never opened this...I am beginning to freak out a bit...can someone please help, I must be working this out incorrectly somewhere.

DP earns £15520, 39 hrs pw.
I'm sahm
2 children

Our current award is just over £7000.
Doing the new calculation gives me around £1800/2300.
That cannot be right, surely??

Hi frenchsticksatdawn

Removing the Family Element in tax credits, the first child premium in Universal Credit and the Family Premium in Housing Benefit – From April 2017, the Family Element in tax credits and the equivalent in Universal Credit will no longer be awarded when a first child is born. This will also apply for families with children making their first claim to Universal Credit. Households who have been in receipt of tax credits or Universal Credit with an interruption of less than 6 months will be protected. Furthermore, children with disabilities will continue to receive the Disabled Child Element or Severely Disabled Child Element in tax credits and the equivalent in Universal Credit. In Housing Benefit, the family premium will be removed for new claims and new births from April 2016.

Hope this helps...

Hi onedogatoddlerandababy

Here's what it should be for you guys:

Basic £1920
Couple £2010
30 hours £810
Basic Element £545
Child 1 £2780
Child 2 £2780
Total = £10845

Current wage £15520 - £6420 x 41p = £3731

Total current TC's around £7114 which works with what you've said.

So new rules: £15520 - £3850 x 48p = £5601.60

New TC's award = £5243.40

Overall loss of £1870.60

Hope this helps...

Thank you, I'm almost in tears with the relief

Carrie you are the Mumsnetter of the day

Bless you mrsdavidbowie

I hope I'm helping, so that message really made me smile. I've been neglecting my husband over answering queries! x

thank you so much! great info.