Tax Credits cuts - don't know what to do

cullengirl · 9 April 2011 at 8:45AM

teabag29 wrote: »

wow...if you are struggling as a family of 4 to live off 45k then theres not much hope for the rest of us. We are a family of 6 and my hubby earns 18k a year. As a previous poster suggested could you not write down your incomings and outgoings and then we can see where you could save money

This is a prime example of why we should actually look at take home money. The above poster aslo fails to mention she would be getting at least about 15,800 a year in tax credits (thats with no tax) thats probably the equivalent of earning about 22000 add that to housing benefits free school meals and no child care she is probably better off!!

zagfles · 9 April 2011 at 9:20AM

melly1980 wrote: »

we can pretend its not the welfare state propping them up if you want to but we know it is.

So in France, where families on around that income would get nothing in benefits, but instead tax allowances for children (and non-earning spouses) which are worth more, is that "the welfare state propping them up"?

bestpud · 9 April 2011 at 9:43AM

cullengirl wrote: »

This is a prime example of why we should actually look at take home money. The above poster aslo fails to mention she would be getting at least about 15,800 a year in tax credits (thats with no tax) thats probably the equivalent of earning about 22000 add that to housing benefits free school meals and no child care she is probably better off!!

Erm, you're getting benefits mixed up. They won't be getting free school meals as they work (unless they live in Scotland but their income would still be too high).

They are also unlikely to be receiving much in housing benefit.

Their tax credits will be a considerable amount though, I agree.

cullengirl · 9 April 2011 at 9:53AM

bestpud wrote: »

Erm, you're getting benefits mixed up. They won't be getting free school meals as they work (unless they live in Scotland but their income would still be too high).

They are also unlikely to be receiving much in housing benefit.

Their tax credits will be a considerable amount though, I agree.

Even so 39 odd thousand and no child care costs - how can she complain about someone earning 45000 with 850 a month childcare costs

melly1980 · 9 April 2011 at 9:56AM

zagfles wrote: »

So in France, where families on around that income would get nothing in benefits, but instead tax allowances for children (and non-earning spouses) which are worth more, is that "the welfare state propping them up"?

Dont take offence at this because you are knowledgable on the subject and have helped me with your advice which was much appreciated. However on this issue you are mincing words and dancing around the subject. Our system is giving money out. There are people recieving more money than they are paying in income tax so it cant be a simple tax break. It is very much a welfare payment, if it was a tax break then those higher up would benefit by more than those lower down.

sjc3 · 9 April 2011 at 10:06AM

The posters on debt free are really helpfull and will come up with loads of advice for you. Not that you have substantial debt, but they are very good at advising on budgets and where you can make cutbacks.

My husband and I struggled financially for a while too. Our bank advised that we had different accounts to cover seperate things. So we set up an account for all our direct debits and didn't have a card for it so we couldn't delve into it. Then we have a spend account and a savings account. By keeping it divided like that we didn't use money that was allocated for other things.

We have two fridge freezers (one in the garage) so we bulk shop and take advantage of all the 2 for 1 etc, you get the idea. I buy far less branded stuff in the weekly shop now and we really dont notice the difference.

Can you swap your credit card company to a 0% deal for 12 months and save on interest payments?

I dont want this in anyway to come across as patronising. These were some of the ideas that were suggested to me and helped loads. Good luck

Blue22 · 9 April 2011 at 12:51PM

melly1980 wrote: »

It is posted as if their high running costs are some kind of default position that is unavoidable when in reality it is a lifestyle choice.

I would argue that housing, childcare (when 2 of them are working) and transport to work, are all unavoidable costs and not a lifestyle choice.

melly1980 · 9 April 2011 at 2:42PM

Blue22 wrote: »

I would argue that housing, childcare (when 2 of them are working) and transport to work, are all unavoidable costs and not a lifestyle choice.

Correct, but what else is in there? Because up to now we have the assumption that they spend 5K on petrol (they both could work 3 mile away from home for all we know). The only fact we know is the childcare cost. I will bet a pound to a pinch of $h1t that if you dig into this there is I-Phones each, laptops, PS3's, Full Sky package, 2 expensive cars etc etc which is fine when you can afford them but have to go if you cant. Thats just life.

zagfles · 9 April 2011 at 5:47PM

melly1980 wrote: »

Dont take offence at this because you are knowledgable on the subject and have helped me with your advice which was much appreciated. However on this issue you are mincing words and dancing around the subject.

No I'm not. This isn't word-play, understanding the way the tax and benefits systems interact is fundamental to understanding why "benefits" (inc tax credits) are payable so high up the income scale in the UK.

In the UK income tax (and NI) treat everyone as an individual unit, but the benefits system treats families as a unit. This disconnect between how tax and benefits operate means that families are overtaxed. No account is taken of dependants in the tax system, but account is taken of family members' earnings in benefits.

The tax credits system (as well as child benefit) is a sticking plaster over a fundamentally flawed tax system. With a decent tax system that was consistent with the benefits system, ie assessed a family as a unit, they wouldn't be needed. Instead all that'd be needed is benefits for those on incomes too low to use their tax allowances.

Our system is giving money out. There are people recieving more money than they are paying in income tax so it cant be a simple tax break. It is very much a welfare payment, if it was a tax break then those higher up would benefit by more than those lower down.

Exactly, which is why families like the OPs would be better off with a tax system which assessed families as a unit, like in most of Europe. Instead we have a system which takes too much off them them in tax and gives a little of it back in tax credits, but not as much as they'd have saved in tax with a French style system.

So the OPs family pays about £10k in tax and gets about £3k back in tax credits & child benefit. Net contribution to the state £7k.

In France a similar family might pay around £6k tax and get nothing in benefits. Net contribution to the state £6k.

So tell me, which family is relying more on handouts, the British one or the French one?

FOURCANDLES_2 · 9 April 2011 at 6:38PM

To be honest 45 k and only a £650 mortgage the rest is living expenditure which we all have to roll with, and you are panicked at losing your tax credits . I think you need to do a soa so we can see what is happening or what the best course of action can be .