Lib Dems ARE cutting "Middle Class Tax Credits"

[Sweeedes]

Just so there's no confusion.

Fruitshoots - are you including Child benefit in that £200? If not I don't want to worry you but I'm fairly sure you may be being hugely overpaid.

singlemum - Exactly! You're in the kind of situation which tax credits were designed to help.

wastwin - Hate to tell you this, but you don't need to go to the Jobcentre in person to claim tax credits. You fill in loads of forms and send evidence of income and occasionally have to ring them up...so it doesn't matter what you wear...you could be starkers or wearing your latest Versace for all they know! I don't even possess a flat cap or a whippet and what exactly is a Gregg's sausage roll - never heard of them!

northern - I think she might be too, as I'm receiving only a few pounds more on a much lower income...unless her childcare costs run into thousands.

I don't see why any household with an income over say £35K (and I'm being generous here) should get benefits at all.

Raising the tax free allowence seems like a much better idea - I agree that the current system is absurd.

My hubby and I don't get tax credits with our mortgage and childcare and household bills it is more than one of our full salaries! We have no choice but to both work! If we could be better of my £700 each a year that would help but with everything else rising it kinda of counter balances itself really! Look at petrol it has sneaked back up to £1.20 per litre again!

Amber - I've been in that situation and I must say "some" help with childcare would have been appreciated. I paid nearly half my income for 10 years for childcare, but it is was our choice to have children and and we coped. £35k isn't a fortune if you have a mortgage/have to pay rent in the South East and, to be fair, benefits do taper off quite steeply after a certain amount. I'm really surprised that fruitshoots gets £200 a month.

IME once your income goes above a certain level the working tax credit tapers to zero and the child tax credit baselines out about £50 a month. I just put in 4 different scenarios to the "calculator"-

Household income £50K - child tax credit £529.
Household income £35K, child tax credit £1450 (no WTC)

Household income £20K - child tax credit award over £7000, including 60% of childcare costs paid.

Household income £15K - 7800 CTC and about 1200 WTC

So IMO the middle incomes are only getting Child tax credit and it is under 5% of income - not the sort of amount that would make the difference between putting food on the table or not, or whether it's worth working. I think in these straitened times that people on that level of income do not normally need a few hundred pounds of benefits.

butterscotch - Are you sure you're not eligible for help with childcare? I honestly don't know the figures, but if fruitshoots is getting £200 a month, it sounds as though you should get something.

tootoo - Thanks for working that out. I couldn't be bothered, but it sounds about right. It's complicated further by the amount you pay for childcare.

I agree with the lib dem plans.

Actually, tootoo, just looked at your figures again and I'm not expecting anything like £7800 when I'm reassessed. How many adults and DCs did you put into the calculator.

Well I had to invent some statistics but I put in 2 kids, one at school and one in £70 a week childcare. If fruitshoots has a lot of children then that would bump up the CTC I guess.

Problem is that with enormous mortgages, even £50K doesn't stretch like you'd think it should. Would be more helpful if something was done about the stupidly high house prices.

I put in 2 adults, one working, one selfemployed, and toyed about with their incomes.

It's here if you want to play (wow what a fun life we have)

I agree that something should be done about stupidly high house prices. Noone forces you to have a huge mortgage. We can't afford a huge mortgage so we rent.

Sweeedes, it's good to see you

But the thread title is misleading. This is one of the Libdem's better policies IMO, better to take lower earners out of the tax net altogether and encourage more people to work.

Had you started a thread about the scandal of reducing tax relief on pension contributions to the basic rate, I'd have been in your corner.

There should be a but in my post.

You would have to have at least 4 children in expensive childcare to get that amount on that income - and even then I don't think you would because as others have said it tapers off as you get near 50 grand. I really, really hope she was counting Child benefit as a tax credit!

I am not voting Lib Dem as don't get a sniff of any sort of beneioft but am more than unhappy about vopting for any party that will try and get us to join the Euro and scrap Trident whilst Iran are piling up the uranium in readyness for something or other!

Quattrocentro - how will it encourage anyone to work?

What exactly is a "middle class" tax and how does it differ from a "working class" one??

Quattro - Why should high earners pay a smaller percentage into their pension contributions than somebody on the basic rate? By the time they get to pension age, they might only be paying back basic rate, so it's win-win for them. Sorry, can't agree with you on that.

I have always thought that working tax credits were a device to get around the fact that the minimum wage is not a living wage - hence top ups for those deemed in the right circumstances.

Wonder if LibDems will be raising the minimum wage.

blueshoes - No, it's not necessarily. For, example a single person on National Minimum Wage will not get tax credits. They're designed to make work pay for people with children and low incomes. Whilst people don't make a profit out of having children , people would have been better off not working and claiming income support (with the old system) than earning the National Minimum Wage. A "living wage" for one adult and two children (excluding rent and council tax)is about £195pw.

Hope that makes sense!

Daphne, thanks, I do understand.

Would be very interested to know how the figures would pan out for those currently receiving tax credits. Would they be better off under the current tax credit or proposed Libdem regime (no tax credits but higher threshold rate of tax).

I cannot agree more with the simplicity of administration of the Libdem proposal.

blueshoes - Of course, you can't always believe what manifestos say...

but...

The LibDems are only talking about scrapping tax credits for households earning over £50k. People on low incomes would not be affected by tax credits or NICs, but would gain from the raising of the tax threshold. In a nutshell, anybody earning less than £20k should be better off.

Forgot to add...

The unemployed would not benefit from raising the tax threshold, which is why the LibDem proposals appeal to pensioners on a limited income and people in work on low incomes...that's a big slice of the electorate!

Thanks for clearing that up, Daphne. It all sounds in line with Libdem policy. I see that tax credits will still be with us.