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Tax Credits Bill Passed - Wider Economic Effect To Be Felt?

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http://www.bbc.co.uk/news/uk-politics-34260902

MPs have backed government plans to cut spending on tax credits in the face of opposition from Labour and the SNP.

The Commons approved plans to lower the earnings level above which tax credits are withdrawn from £6,420 to £3,850 and speed up the rate at which the benefit is lost as pay rises by 35 votes.

Ministers say the move, estimated to save £4.4bn, is part of wider plans to raise pay and incentivise work.

But Labour say it is an "ideological attack" on working families.

The curbs on tax credits were announced in Chancellor George Osborne's post-election budget in June.

During a 90-minute debate in the Commons, the opposition claimed three million families face losing an average of £1,000 a year from next April.

I wonder what impact this will have as I doubt wages will be going up fast enough to make up the loss. Although this subsidy should never have been doled out like it was I wonder what the wider economic impact will be, especially as tax credits helped you borrow more money to buy a house with. If rates went up at the same time this could cause a significant squeeze on low income households. I was aghast when we last moved the mortgage adviser was quite happily calculating the money we could borrow with this added in bonus, even then I wondered what would happen if this nice tax break was lost and changes made.

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That's great news, i'm just waiting for the Fed to announce an interest rate rise on thursday to increase the fear for the pro hpi crowd pretending to have real jobs.

MMR lending criteria will need to be adjusted to take the reduction in tax credits into account, better still if they keep it simple by just removing tax credits from being admissable on a mortgage application.

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It needed to be done as too many self employment fiddles.

Its going to have a sizeable impact as many have planned their lives around it.

Corbyn will offer it back and will win the free money vote

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There could be huge indirect consequences, effectively putting a large proportion of society on lockdown. They may not have much individually, but they generally spend what they have and there are large numbers of them.

With the lower end having their government funded disposable income slashed, the middle spending most of theirs on their overpriced house - there's not many spenders left.

Could cause a ripple in the GDP and inflation numbers.

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My friends wife lost 40quid a week in last budget

I believe he will lose 50quid a week in April 2016

But they can afford a full sky package and I cant cause I get no tax credits. If they can afford sky they don't need extra money

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My friends wife lost 40quid a week in last budget

I believe he will lose 50quid a week in April 2016

But they can afford a full sky package and I cant cause I get no tax credits. If they can afford sky they don't need extra money

Wow - those are massive cuts - £2000 and £2500 p.a. respectively. If they can still afford Sky, who knows how they were living before!

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My friends wife lost 40quid a week in last budget

I believe he will lose 50quid a week in April 2016

But they can afford a full sky package and I cant cause I get no tax credits. If they can afford sky they don't need extra money

Out of interest, did they have Sky for the footy ?

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That's great news, i'm just waiting for the Fed to announce an interest rate rise on thursday to increase the fear for the pro hpi crowd pretending to have real jobs.

MMR lending criteria will need to be adjusted to take the reduction in tax credits into account, better still if they keep it simple by just removing tax credits from being admissable on a mortgage application.

1) the changes don't fully take effect until 2017

2) Tax credits aren't just 'doled out' for people with kiddies. Many disabled people rely on them to get back to work

3) They're not being abolished, changes are just being made. You could still have a couple of kids over the limit between now and 2017 and you'd get child tax credit to support them. It's for people who bring additional children above the 2 threshold after 2017 that are affected not people who have done so before this. If I am not mistaken?

The big elephant in the room anyway is universal credit. Once that's fully rolled out, tax credits will be pretty much abolished.

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There's the odd facebook post about how the changes are taking 1000s of 'some of he poorest families' in the UK.

The problem is they are not. Play the game and your household income will be well into the top 50%.

On income/hours work they'll be into the top 25% hourly income.

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Wow - those are massive cuts - £2000 and £2500 p.a. respectively. If they can still afford Sky, who knows how they were living before!

Or, depending on how you look at it, massive benefit payouts.

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1) the changes don't fully take effect until 2017

2) Tax credits aren't just 'doled out' for people with kiddies. Many disabled people rely on them to get back to work

3) They're not being abolished, changes are just being made. You could still have a couple of kids over the limit between now and 2017 and you'd get child tax credit to support them. It's for people who bring additional children above the 2 threshold after 2017 that are affected not people who have done so before this. If I am not mistaken?

The big elephant in the room anyway is universal credit. Once that's fully rolled out, tax credits will be pretty much abolished.

Except that Universal Credit won't be fully rolled out.

At present there may be some families claiming UC, but that's instead of JSA in jobless households - I can't find any actual figures from the government, though. There are no low-income families with someone in work claiming UC.

Labour has claimed that it will take 495 years to roll out UC fully at the current rate and I imagine this figure is pretty realistic.

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The Commons approved plans to lower the earnings level above which tax credits are withdrawn from £6,420 to £3,850 and speed up the rate at which the benefit is lost as pay rises hike the effective tax rate on low pay by 35 votes.

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It needed to be done as too many self employment fiddles.

Its going to have a sizeable impact as many have planned their lives around it.

Corbyn will offer it back and will win the free money vote

They need to get into BTL

:lol::lol::lol:

Edited by TheCountOfNowhere

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Out of interest, did they have Sky for the footy ?

I know for a fact they have Chelsea FC TV channel. They have had also had bt sports in past but not now currently. They have movies

Funny thing is when visit they usual freeview channels on .

The other thing that annoys me . He had chance of promotion few years but did not take cause it would effect his tax credits

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2) Tax credits aren't just 'doled out' for people with kiddies. Many disabled people rely on them to get back to work

Working Tax Credits sure, but CHILD Tax credits ARE INDEED just doled out to people with children. That was the problem!

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I know for a fact they have Chelsea FC TV channel. They have had also had bt sports in past but not now currently. They have movies

Funny thing is when visit they usual freeview channels on .

The other thing that annoys me . He had chance of promotion few years but did not take cause it would effect his tax credits

I suspect and hope he'll rue that greedy decision! Next time you visit why not bring it up? :) "Bet you wish you'd taken that promotion, that was your only chance etc" :)

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I suspect and hope he'll rue that greedy decision! Next time you visit why not bring it up? :) "Bet you wish you'd taken that promotion, that was your only chance etc" :)

I don't think he realises the tax credit chances in April 2016 yet. He only told me what they get when he was drunk one night at a party. How I know is wife lost 40quid a week.

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I know for a fact they have Chelsea FC TV channel. They have had also had bt sports in past but not now currently. They have movies

Funny thing is when visit they usual freeview channels on .

The other thing that annoys me . He had chance of promotion few years but did not take cause it would effect his tax credits

Do they have lots of kids? How would they have so much in tax credits even after the wife had her tax credits cut unless they have lots of kids? Or was it something else she lost?

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Do they have lots of kids? How would they have so much in tax credits even after the wife had her tax credits cut unless they have lots of kids? Or was it something else she lost?

Kids grow up + leave education. Tax credits end.

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Do they have lots of kids? How would they have so much in tax credits even after the wife had her tax credits cut unless they have lots of kids? Or was it something else she lost?

they have 2 kids oldest 15 he earns about 15k year at a guess

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The first thing to look at are the cuts from this.

Anyone earning £6400 a year (most of the 16 hour workers once the NMW goes to £8.00) will lose £1700 in tax credits.In other words everyone claiming tax credits WHO WORKS will lose at least £1700 a year.Once you get above £6400 a year in earnings you also lose and extra 7% on top of that figure after April from what you lose now.

Once the two child limit kicks in tax credits will end for every family with two or more children at around £24k of earnings.For one child it will be around £19.5k.

Going forward it is almost certain they will keep freezing the levels so wage increases chip away the amounts through the clawback.They are aiming (as i was told many years ago) to get tax credits to end with two children (or now two or more children) when a couple has one part working 35 hours and the other working 16 hours.The present changes take that to one child.To get to two children they would need to hold tax credit rates while household earnings increase by £5k a year,

I think going forward we can expect they will tighten up the hours rules,but they might wait until after the next election.

UC will end up for people without children id expect.IDS claims its working.My sources still tell me it isnt and there is no way it can be rolled out for families in work with children.On the evidence id say IDS is the one hiding the truth.

Edited by durhamborn

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they have 2 kids oldest 15 he earns about 15k year at a guess

At £15k his tax credits will go down by £2000 a year,roughly £40 a week cut.Once they are down to one child on £15k a year they will get roughly £44 a week in tax credits.If his (or household) income goes to £19.5k after the changes they will get no tax credits (with one child).

Edited by durhamborn

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