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Why Earn More Money?

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Our family is just feeling the direct effects of the twisted UK welfare system and its bizarre.

Until recently we had a good household income so paid off most of mortgage while living comfortably.

A decent final salary pension is in the bag so no pressure there.

Just now doing a poorly paid, but fun, low stress job temporarily (maybe...) while looking for a much better salary.

However, because I haven't earned very much in the last 12months no.1 son has received a very generous NHS Bursary (non-repayable grant) for all of his fees and a good chunk towards living costs for the full 3 years of his BSc.

No.2 son doing 3rd year of A's and will get EMA and we are getting much more Family Tax Credit, although only for a year.

My question is - given that a lot of the Bursary, maybe approaching £10k over 3 years, the Tax Credits and the EMA will disappear if I start earning anything like a typical wage for my IT skills - why am I looking for a better paid job now?

Why don't I just carry on in the low paid job, gradually erode our savings, update my IT knowledge and let the subsidies roll in until the EMA and Tax Credits stop or even until after the income assessment for No.2's final year is complete 2013? Then earn more when we get to keep most of it rather than hand most of it over?

If I can't earn massively more I can't see what my motivation is. No gap in CV - the job is poorly paid but involves current technology and worthwhile projects.

Am I missing something? Please don't take this as bragging - I think we have been very fortunate - but I wanted to share what seems to me a really stupid state of affairs.

Shouldn't people be rewarded for working harder and discouraged from sitting back? I'm confused.

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Yep you are completely correct. Trouble is, a lot of people both in the government and on here seem to think that more means-testing, not less, is the way forward.

If you leave school at 16 and hang around drinking causing trouble, you will get paid benefits for that. If you go to university you will only get a loan (unless you are lucky enough to get a bursary or be supported by an employer). Yet it seems to be generally accepted that prospective students should be charged more, not less.

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The whole system is wrong....many are caught in a trap where there is no incentive to work harder because it will not get them anywhere....your employer and the taxs to the government get the majority benefit from your hard work....there is a fine but definite line......in this country unless you are fortunate enough or have the drive to earn over a certain sum, depending on your fixed living costs and commitments you are better off to do as little as possible.....how can this be right?... companies would rather take the profit from your hard work for themselves and their shareholders.

Make work pay for the workers... ;)

Edited by winkie

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On the one hand there's too many benefits for families and those with children.

On the other, at least the money is going into your kids education, so I'd say enjoy it why it lasts.

I would personally rather work in IT than minimum wage gig, so maybe that is a factor.

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If you use a portion of your savings now to buy your training, you'll become eligible for more benefits quicker.

or a classic car or 2, which is much more fun, or you culd bury some gold in your garden

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If everyone does it, where is the bursary money and tax credits going to come from

true, but this is a ponzi we can actually get to the top of!

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As a couple tax credits is bizarre. We earned good money but joint income now below 11.6k ie. We should be getting almost all tax I pay handed back. Wife will be going back to work or at least try too. But due to paying mortgage off by 50% suddenly that one salary is enough, sure no pension but to live a bit of drinking and a few cheap local festivals, 2 live bands a week. So even for us the temptation is to work less, the trap is laced with honey, Its very tempting to switch over every year for a few years one works one loafs.

they need to ditch credits and raise the tax free band which is surely the same thing but without the overheads of running a bloated help/application process ho hum.

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As a couple tax credits is bizarre. We earned good money but joint income now below 11.6k ie. We should be getting almost all tax I pay handed back. Wife will be going back to work or at least try too. But due to paying mortgage off by 50% suddenly that one salary is enough, sure no pension but to live a bit of drinking and a few cheap local festivals, 2 live bands a week. So even for us the temptation is to work less, the trap is laced with honey, Its very tempting to switch over every year for a few years one works one loafs.

they need to ditch credits and raise the tax free band which is surely the same thing but without the overheads of running a bloated help/application process ho hum.

can't be taking money from hard working families and giving it back to the poor childless couples/singles who are more than happy to pay for other people's snotty progeny.....

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Am I missing something?

I hope yes, but I fear it may be very little.

You're missing the recent change of government away from one that makes an ideology of what you describe. Let's see what changes in the autumn spending review.

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Our family is just feeling the direct effects of the twisted UK welfare system and its bizarre.

Until recently we had a good household income so paid off most of mortgage while living comfortably.

A decent final salary pension is in the bag so no pressure there.

Just now doing a poorly paid, but fun, low stress job temporarily (maybe...) while looking for a much better salary.

However, because I haven't earned very much in the last 12months no.1 son has received a very generous NHS Bursary (non-repayable grant) for all of his fees and a good chunk towards living costs for the full 3 years of his BSc.

No.2 son doing 3rd year of A's and will get EMA and we are getting much more Family Tax Credit, although only for a year.

My question is - given that a lot of the Bursary, maybe approaching £10k over 3 years, the Tax Credits and the EMA will disappear if I start earning anything like a typical wage for my IT skills - why am I looking for a better paid job now?

Why don't I just carry on in the low paid job, gradually erode our savings, update my IT knowledge and let the subsidies roll in until the EMA and Tax Credits stop or even until after the income assessment for No.2's final year is complete 2013? Then earn more when we get to keep most of it rather than hand most of it over?

If I can't earn massively more I can't see what my motivation is. No gap in CV - the job is poorly paid but involves current technology and worthwhile projects.

Am I missing something? Please don't take this as bragging - I think we have been very fortunate - but I wanted to share what seems to me a really stupid state of affairs.

Shouldn't people be rewarded for working harder and discouraged from sitting back? I'm confused.

Yep. The old policy problems of:

"Perverse incentive" http://en.wikipedia.org/wiki/Perverse_incentive

and

"Moral Hazard" http://www.economist.com/research/economics/alphabetic.cfm?letter=M#moralhazard

Charity has to be seen as charity. But when it is taken by the state, it tends to be sees as a "right", and the two problems above become systemic. Tax paying workers feel cheated, "suckers", and pressed into also playing the system.

What was a temporary help for people in trouble, becomes a way of life.

Edit: A possible solution is to devolve the welfare system all the way down to parish/neighbourhood level. This may keep the social controls ("stigma") on abuses.

Edited by Tired of Waiting

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Am I missing something? Please don't take this as bragging - I think we have been very fortunate - but I wanted to share what seems to me a really stupid state of affairs.

Enjoy it while you can, unlike some people you've earned it!

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Opportunity cost. (In the same way that "Property Developers" who gave up their day job are set to pay it ;) ).

Even if you are better off for the time being not progressing your career, should you drop out of the work ethic, you will find it increasingly hard to get back in. And there's no shortage of candidates these days. Earning enough to make it pay certainly will take a number of years of pay rises but eventually you will be earning a LOT more than the threshold point at which it pays to work. Also, I would seriously not rely on the benny now Labia have gone, just a thought :ph34r:

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The whole system is wrong....many are caught in a trap where there is no incentive to work harder because it will not get them anywhere....your employer and the taxs to the government get the majority benefit from your hard work....there is a fine but definite line......in this country unless you are fortunate enough or have the drive to earn over a certain sum, depending on your fixed living costs and commitments you are better off to do as little as possible.....how can this be right?... companies would rather take the profit from your hard work for themselves and their shareholders.

Make work pay for the workers... ;)

Yes, so right.

Smash up the current system, only 3 benefits.

1) Citizens income for all UK nationals over 18 years of age. Say about £75 a week.

2) Income for disabled people, decided by doctors. Total amount of scheme is closed, so if doctors start giving more to able bodies fraudsters, then that is less for those in real need. Proper doctors, realising this, wont give to those with a bit of a headache knowing that they will be taking from paraplegics.

3) A Pension replacing 1) for those above a certain age. Pension age to move in line with life expectancy.

Income tax would rise a bit more steeply, as you are giving the benefit of 1) to everyone.

Net result, no poverty trap.

And it does mean selling off all council housing to the highest bidder, and no child benefit, you pay for your own kids.

You will always have the incentive to earn more.

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As a couple tax credits is bizarre. We earned good money but joint income now below 11.6k ie. We should be getting almost all tax I pay handed back. Wife will be going back to work or at least try too. But due to paying mortgage off by 50% suddenly that one salary is enough, sure no pension but to live a bit of drinking and a few cheap local festivals, 2 live bands a week. So even for us the temptation is to work less, the trap is laced with honey, Its very tempting to switch over every year for a few years one works one loafs.

they need to ditch credits and raise the tax free band which is surely the same thing but without the overheads of running a bloated help/application process ho hum.

+ lots and lots...............why take it with one hand, spend alot on bureaucracy and waste then pay it back to the other hand....I know it creates jobs. :unsure:

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Guest Elephant_In_The_Room

The following thought has crossed my mind:

Do I strive for a better job in order to afford a house more quickly?

OR

Stay in my current job and wait for the slump/slide/crash?

Option 1 will raise my stress levels (all promotion involves more hassle and b0ll0cks) and may also result in me being financially worse off (because I've taken on a larger mortgage pre-slump.)

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The following thought has crossed my mind:

The question rephrased is. Do you want to use wishful thinking to control what happens in your life, or do you want to actually take control.

If you increase your salary and the crash happens you will only be in an even better position.

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Thousands of people are in exactly the same perverse incentives trap, only not through the benefits system alone; any divorcees with alimony or child support who gets a pay rise risks having their status reassessed and a larger amount taken out of the new pay packet. I know in my case every extra pound I earn risks being 'taxed' (once you add income tax, NI, and divorce tax as I call it) at an effective rate of 80%. The disincentive to get the pay rise is massive.

So - look for other ways to get the interesting job but avoid that tax rate. Perhaps ask for a 7 week holiday allotment but less pay? Or shorter hours each week? Or a promise that they will support you in a degree or some training for the first 3 years (costs them X, would cost you X+tax)? Or guaranteed travel built into the job spec? Or paying for a computer plus internet at home for you for flexiworking?

lots of non-financial ways that you can look for to avoid the punishment of taxation....

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Our family is just feeling the direct effects of the twisted UK welfare system and its bizarre.

Until recently we had a good household income so paid off most of mortgage while living comfortably.

A decent final salary pension is in the bag so no pressure there.

Just now doing a poorly paid, but fun, low stress job temporarily (maybe...) while looking for a much better salary.

However, because I haven't earned very much in the last 12months no.1 son has received a very generous NHS Bursary (non-repayable grant) for all of his fees and a good chunk towards living costs for the full 3 years of his BSc.

No.2 son doing 3rd year of A's and will get EMA and we are getting much more Family Tax Credit, although only for a year.

My question is - given that a lot of the Bursary, maybe approaching £10k over 3 years, the Tax Credits and the EMA will disappear if I start earning anything like a typical wage for my IT skills - why am I looking for a better paid job now?

Why don't I just carry on in the low paid job, gradually erode our savings, update my IT knowledge and let the subsidies roll in until the EMA and Tax Credits stop or even until after the income assessment for No.2's final year is complete 2013?  Then earn more when we get to keep most of it rather than hand most of it over?

If I can't earn massively more I can't see what my motivation is.  No gap in CV - the job is poorly paid but involves current technology and worthwhile projects.

Am I missing something?  Please don't take this as bragging -  I think we have been very fortunate - but I wanted to share what seems to me a really stupid state of affairs.

Shouldn't people be rewarded for working harder and discouraged from sitting back?  I'm confused.

Count yourself lucky. I'm unemployed (was until I found a 16 hour a week part-time thing).

I got NOTHING unemployed and I now get NOTHING to assist me on the pittance I am supposed to live on. Makes me wonder why, because I am single and no dependants why I should work at all 'cos I've realised I'll only get taxed to pay for YOUR kids and I won't get ANY help when I need it.

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Yes, so right.

Smash up the current system, only 3 benefits.

1) Citizens income for all UK nationals over 18 years of age.

2) Income for disabled people, decided by doctors. Total amount of scheme is closed.

3) A Pension replacing 1) for those above a certain age. Pension age to move in line with life expectancy.

Income tax would rise a bit more steeply, as you are giving the benefit of 1) to everyone.

Net result, no poverty trap.

You will always have the incentive to earn more.

I would go for something very similar, just replace 1&3 with a negative income tax. Even simpler!

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The question rephrased is. Do you want to use wishful thinking to control what happens in your life, or do you want to actually take control.

If you increase your salary and the crash happens you will only be in an even better position.

Unless you work in an industry that's about to be decimated by the massive structural economic shift we are undergoing and you get laid off and your savings wiped out, in which case you'll have completely wasted your time.

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My question is - given that a lot of the Bursary, maybe approaching £10k over 3 years, the Tax Credits and the EMA will disappear if I start earning anything like a typical wage for my IT skills - why am I looking for a better paid job now?

Because you can take a contract IT position earning say £140,000 per year. Take a low salary and load up on tax credits and handouts while leaving the bulk of the money in the company. In three years when the sprogs leave the nest you can switch back to a permanent job and cash out your huge winnings.

Doesn't work if you have any sense of shame, but it should be OK for you.

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I would go for something very similar, just replace 1&3 with a negative income tax. Even simpler!

LJAR,

this is a negative income tax system, just a variant on it.

Everyone gets the £75 a week, always something to fall back on. And you can dispense with the minimum wage. If employers dont pay enough, it might be uncomfortable, but you can survive without slave subjecting yourself to slave labour.

Edited by leicestersq

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Watching CNBC today a chap from the Adam Smith Institute happened to say that there's 51 different benefits available in the UK and over 4,000 pages of rules relating to them.

Anyhow, if implemented, what you are proposing with just those two provisos would instantly lead to mass homelessness as there's legions who rely on Housing Benefit to keep a roof over their head and in many cases those of their children too.

Labour camps for those convicted of vagrancy would sort them out, I suppose?

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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