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Inoperational Bumblebee

Wtc Threshold Drop + Nmw Increase = No More Wtc?

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May have been mentioned in the Budget thread and I missed it, but a friend shared an image on Facebook with the tagline 'This is evil'.

The text says:

From April 2016 the income threshold to claim Working Tax Credit will go down from £6420 to £3850 at the same time as the minimum wage rises to £7.20.

To claim you must work at least 16 hours per week.

16 hours at £7.20 pays £5990.40 per year.

That's £2140 over the threshold to qualify for tax credits at all.

No one will ever qualify for this benefit after April 2016!

Osborne has totally abolished Working Tax Credits and no one has even noticed...that is what Duncan Smith was cheering during the budget?

If true, which at first glance it seems to be, it's a 'pay' cut disguised as a pay rise! Cunning move there.

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May have been mentioned in the Budget thread and I missed it, but a friend shared an image on Facebook with the tagline 'This is evil'.

The text says:

If true, which at first glance it seems to be, it's a 'pay' cut disguised as a pay rise! Cunning move there.

People will still be claiming WTC, but just not at such high amounts as before. It doesnt mean its stops if you earn the minimum wage and work 16 hours or more.,It means that it starts to taper off and pay less much quicker, starting at £3850. The threashold is where it starts tapering off from, not where it stops..

Edited by GinAndPlatonic

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That's not how it works.

£6420 used to be (and will be until April 2016) the point at which it starts to taper. That doesn't mean they stop after £6420

EDIT: G&P pipped me to it

Edited by thombleached

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Well, sort of, but not all the facts there...

I think the situation is (happy to be proven wrong):

The maximum you can earn before the credits are slowly removed is moving from £6420 to £3850. So someone on £5.6k would currently get the full tax credits, but with the changes the individual might now earn £6k, but will have some of that £400 taken away in reduced benefit (as they are above the new threshold) - this would be a reduction of about £1k (as far as I can tell, but I don't really understand the TC rules). So the impact of the changes will be a reduction in total money coming in.

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It will all but disappear IIRC when the NMW hits £9.20 in 2019/20 in conjunction with the proposed increases in the hours worked threshold to 24? having to be worked before eligibility

I haven`t looked seriously at the figures but it seems it will be drastically cut over the next four/five years and just be a softener for people on low wages, instead of a nice little earner as it is now.

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How anyone can think this is a bad thing is beyond my understanding, even if they are a recipient of it.

Rather then letting the gov/tax payer pick up the shortfall for shit wages, the onus moves back to the employer to pay you the rest. Your net wage presumably remains the same or better.

Same applies to housing benefit. Remove it, and with it the floor on rents goes. Rents drop, you're better off or in the same net amount as before.

People need to be aware of who benefits from these subsidies - employers and landlords.

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From April it means WTC are means tested away once earnings reach £3850 at 49%.16 on minimum wage will be £1000 less tax credits a year.However if they are getting housing benefit they will get £600 of that back in higher housing benefit BUT the family element is being removed from the allowable earnings threshold in housing benefit and thats worth £600 a year so in affect it will be a £1000 benefit cut affecting everyone.

Once hours increase above 16 hours people who lose tax credits due to the higher taper get 60% of it back through higher housing benefit.

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For the self employed, there is no minimum wage. So presumably, that NMW side will not affect their WTC.

I understood that after a short qualifying time the self employed would be assumed to be making minimum wage and have the benefits adjusted accordingly. How many knitted loo roll covers do you need to make per hour to make minimum wage?

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From April it means WTC are means tested away once earnings reach £3850 at 49%.16 on minimum wage will be £1000 less tax credits a year.However if they are getting housing benefit they will get £600 of that back in higher housing benefit BUT the family element is being removed from the allowable earnings threshold in housing benefit and thats worth £600 a year so in affect it will be a £1000 benefit cut affecting everyone.

Once hours increase above 16 hours people who lose tax credits due to the higher taper get 60% of it back through higher housing benefit.

:blink: (I'm sure it all makes perfect sense but I've never been able to get my head round tax credits and tapers)

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If the rules are more open to manipulation by the "self employed" then expect the government to be bragging that record numbers of new businesses have been opened as the new rules approach.

Enterprise economy.

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How many knitted loo roll covers do you need to make per hour to make minimum wage?

They'll be driven down the bend by bureaucracy. It sounds like an engaging business, but they'll have to spend a pretty penny. I doubt they'll be flushed with success.

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If the rules are more open to manipulation by the "self employed" then expect the government to be bragging that record numbers of new businesses have been opened as the new rules approach.

Enterprise economy.

Quite the opposite. Being a big issue seller or dog walker will no longer be the key that unlocks the benefit bonanza.

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Quite the opposite. Being a big issue seller or dog walker will no longer be the key that unlocks the benefit bonanza.

Or nail person type jobs :) - too many.

That would be good news if it also applies to make jobs.

Your're saying it's harder to manipulate the hours/income etc under the "self employed" tax arrangement - considering the apparent tax relief benefits?

Like any taxpayer I'm naturally just interested in what the latest bonanza taking taxpayer money is - or isn't.

Edited by billybong

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Or nail person type jobs :) - too many.

That would be good news if it also applies to make jobs.

Your're saying it's harder to manipulate the hours/income etc under the "self employed" tax arrangement - considering the apparent tax relief benefits?

Like any taxpayer I'm naturally just interested in what the latest bonanza taking taxpayer money is - or isn't.

That is exactly what I am saying. Under universal credit it is assumed you make at least minimum wage even if you don't. You are allowed 12 months to build you business but this is only once in a lifetime.

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surely if someone works more than 16 hours per week (which is only 2 days out of 5) they can up their hours to compensate for the loss of TCs and I thought you only were able to do just 16 hours if you were a single parent or disabled and everyone else had to clock up 24 (all of 3 days) if a couple or 30 (4 days) if you were single.

cannot see how there will be a large number of people affected greatly and TCs have not disappeared as CTCs are still there.

TCs have been a very good demotivator in their current form and I blame Gordon Brown.

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I haven`t looked seriously at the figures but it seems it will be drastically cut over the next four/five years and just be a softener for people on low wages, instead of a nice little earner as it is now.

WTC is not a nice little earner. You are thinking of CTC (child tax credits) which pays out approx £55 per child per week. WTC does stop people from being subject to the overall benefit cap though, so in theory someone selling the Big Issue and earning peanuts, can claim a whole host of benefits and not be subject to the OBC because they are claiming WTC.

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WTC is not a nice little earner. You are thinking of CTC (child tax credits) which pays out approx £55 per child per week. WTC does stop people from being subject to the overall benefit cap though, so in theory someone selling the Big Issue and earning peanuts, can claim a whole host of benefits and not be subject to the OBC because they are claiming WTC.

It is a great little earner actually if you are self employed especially...and even if you are paye declaring 25 hours as a couple the wtc up until April this year was £55 a week. With CTC added yes it is a nice little earner..£100 a week anyone.? I know it is about to change but over the next five years. Anyone working cash in hand it is very sweet.

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