Tax Credits cuts - don't know what to do

disneymum

Do either of your employers adhere to the childcare voucher scheme? That would save you some money per month as the vouchers come out of your wage before tax.

FBaby

it really annoys me when people on lower salaries compare themselves to those earning more and deduct that therefore they should just toughen up. People live to their means, so yes, when you earn more, you tend to do what everyone aspire to do when focussing on trying to get a better salary, they buy nicer cars and bigger homes... The issue is not the salary, is having to adjust to a huge change in income coming in.

Saying that, I am surprise you are paying so much childcare. If you work 18 hours, your kids are not there full-time. How old are your children, are both two young to get the grant after 3 years old? You say £6,000 is not a lot of debt..... I think it is massive for your combined salary. If it wasn't for this debt and the monthly repayment, you probably would be ok, even if having to cut down until your eldest start school.

FBaby

But there has to be an incentive to work....and pay NI...to contribute towards those who don't.... If there was no support for childcare costs, most mums wouldn't be able to work until their children were at school, at best... that means a 4-5 years break in their career, assuming they only have one child, probably more like 8 years break, which means almost the end to the chance or earning at or above average salary.

The bottom line is, working full-time and raising young children demands a lot of sacrifices, especially when you have to travel to get to your job. Surely there has to be a benefit to doing that work, ie. enjoying things that those on lower salaries cannot afford. The cost of childcare element to the government for a few years is more than made up by the NI that woman will pay for the rest of her working life as a result of her having been able to work during these years. It is a good investment, certainly much better than allowing single parents to get all the benefits they receive when they are much less likely to ever contribute generously once the kids have started school.

I do agree though that the OP needs to reassess her finances. Before I moved with my partner, I earned under £40K + CB and £45 a month tc, paid £250 childcare costs (before/afterschool clubs), paid £725 mortgage (no maintenance from dad) and even though I rarely had much left at end of the month, I was ok. However, I had/have no debt, if I had to repay £300 or so a month, I certainly wouldn't have been able to cope.

Blue22

FBaby wrote: »

it really annoys me when people on lower salaries compare themselves to those earning more and deduct that therefore they should just toughen up.

Ditto it really annoys me too.

It also annoys me that they compare the gross income rather than take home pay, and that people on lesser salaries choose to ignore the thousands of £s they receive in tax credits when making comparisons.

If people looked a bit closer at the OPs circumstances they would see how little she has left after housing and work related expenses

Nett income in the region of 35k
Childcare costs 10k
Mortgage 8k
Council tax (?) 1k
Work related transport costs for 2 people (?) 5k

Which leaves the family with approximately 11k or about £220/week after these essential costs.

The governments figure for what a family of 4 need to live on after housing costs is in the region £250/week

So the irony is the OPs disposable income is less than those who have smaller 'earned incomes' But it is her, and families like hers, who are paying the tax to support other peoples children through tax credits.

mrsspendalot

I think it has just become a symptom of this board though, to be honest.

If you come on here and mention you get tax credits or benefits you're either jumped on for being a benefit scrounger or told you shouldn't be getting anything because of your income level.

No one can do anything right.

High earned income doesn't always = high disposable income
Low earned income doesn't always = low disposable income
Benefit income doesn't always = life of luxury
Benefit income doesn't always = completely skint either

It's all dependent on individual circumstances, including how many children you have, how much debt you have, how big your mortgage is, whether you pay child maintenance out of your income, whether you receive child maintenance on top of your income, where you live ..... there is no 'one size fits all' way of deciding how much is too much money, or how little is too little.

It's supposed to be about helping people ensure they get what they're entitled to, not judging why they might need that help in the first place.

mrsspendalot

Having said that, I'm actually surprised by how many people have posted over the last couple of days in complete shock at the drop of tax credits, as if it had come as a total surprise. The changes were announced last June, and some more last October. If I had been claiming childcare costs and seen last year that they were dropping the amount they paid from 80% to 70%, I would have been calculating how that would impact, and planning accordingly, either by finding ways to reduce my income, or reduce childcare, etc.

However, I am also surprised that so many people have had payments dropped immediately from the start of the year when last year's awards haven't been finalised yet, so tax credits technically don't know yet what they should be basing any current payments on other than the provisional amounts they calculated last year. That seems a bit odd. It hasn't given anyone the opportunity to ring up and update any details about childcare costs, changes of hours, income etc. It might have been fairer to wait to implement the changes once all awards were finalised.

Nitha

Hmm, I can see where you are coming from but unfortunately you will need to make a significant change to your lifestyle and that's the be all and end all. Because it's the only option.

I've lost a good chuck of income in the past and no amount of complaining would change my circumstances. We just cut back elsewhere. We sold our car, moved closer to work so we could walk, cancelled our mobile phones - all sorts just to get by.

moomoomama27

I would head over to the debt free wannabe board, and if you do a SOA they will be able to help you. It's amazing the things you can cut, that you didn't think of before. Also there is a section on meals on a budget that may help.

melly1980

EmmyRoo wrote: »

Hi,

I just went onto the HMRC website to use the tax credits calculator to try to find out what my tax credits will be this financial year. From what it said, it looks like my tax credits will be reduced to about a quarter of what we received last financial year. This is a complete disaster for my husband and me, as we were only just getting through the month on what they have been giving us up to now.

We both work, earning about £45,000 p.a. gross between us, which is probably why the tax credits have been cut so much, but although it looks like a decent income on paper, it doesn't stretch nearly far enough in reality. Our childcare costs for 2 boys under 4 amount to over £830 per month (I work 18 hours a week) and our mortgage is £650 a month. Factoring in petrol costs (essential for work), food bills and all the other "first of the month" payments we make, we just cannot survive without the tax credits money.

We discussed the possibility of me applying for a career break from work until our eldest goes to school, in a hope that having no childcare costs would make a big difference, but having done some rough calculations in my head I think it'd still mean we were bringing in over £200 a month too little. We can't ask our parents for help as my in laws already pay something towards the childcare every month and my parents support 2 of my sisters still so their money's stretched far enough.

I am feeling really panicked about this, I just don't know what to do or who to turn to for advice. I searched the web this morning but there doesn't seem to be any advice about the new tax credit cuts and what to do in this situation. I'm sure we aren't the only family in this situation.

Can anyone offer any words of advice? We already live frugally and have no holidays, never buy clothes for ourselves (most of the kids stuff is presents from friends and family), my husband and I never go out for meals or to the pub etc. so I can't see how we can cut back on expenditure anymore. We have done Martin's Budget Planner spreadsheet and use the "piggybanking" technique.

Thanks.

E. x

you need to look good and hard at what you are calling essential in your life. I have a wife and 4 kids and live fairly easily off less than that. Dont get me wrong, Im well paid but we have more kids and less money coming in. There quite simply has to be something wrong somewhere, why do you think the solution should be for us to keep providing you with money to keep up your high expendature.

melly1980

EmmyRoo wrote: »

I'm glad you don't feel that you are skint on a similar income to ours, but perhaps you don't have as much expenditure as we do?
.

Well spend less then. No one has forced you to have a higher expendature. Thats not being nasty, just truthful you can not spend what you havent got.