Time To Cease Crying About Low-earners?

MattLFC

Right, just got a new job, and carried out some calculations. Both jobs are over 30 hours and thus eligable for WTC including the 30 hour element.

I recently turned 25 (May) and was surprised (and happy) to learn the amount of tax credits and housing/CT benefit available to me just for being a day older than the day previous - which in itself seems to punish low-earning people under 25, who like myself, have paid into the system since 16 years old, but nevertheless, I applied for both benefits and was awarded:

Earnings - £166.40 p/w = ~£720 p/m NET
WTC - £52.00 p/w = ~£220 p/m
HB/CT Benefit - £41.00 = £175.71

TOTAL INCOME - £259.40 p/w = ~£1115.11 p/m

I have just calculated my earnings from my new job in accordance with WTC and HB/CT benefit, and found the following:

Earnings - £219.00 p/w = ~£951.18 p/m NET
WTC - £9.56 P/W = ~£41.00 p/m
HB/CT Benefit - £0.00

TOTAL INCOME - £228.56 p/w = ~£992.18

So essentially the government is allowing those on a low wage, working less hours (im doing 10 hours more in the new job) to earn a considerably higher amount of net income each month, and thus live a considerably better-off existence.

How can this be fair, and I think its high time the nation stopped moaning about low-earners, it seems they are better off than higher earners, I know I certainly was!!

Where the hell did the moron who decided upon the current WTC/HB calculations get his figures from?

:mad:

funky1471

If you're calculations are correct then that's not a very good system really!

What do you have to earn under to be considered a low earner?

rhcp

Your WTC payments are based on your income for the tax year 10-11, so this should be the same amount for both scenarios.

MattLFC

Well thats what WTC just told me; because I work more hours and get a higher wage per hour and thus a higher wage per month, it will reduce my tax credits to £490 per year from my previous allowance of £2348.97 from 25.05.2011 to 05.04.2012.

relic

I have to agree I do find it odd, out of interest a few weeks ago I did a calculation that if I went down from 39 hours a week to 30 (basically working 4 days instead of 5) when the baby is born, i'd actually be a few quid better off every week.

Russe11

So the goverment is subsidising the wages employers pay with benefits, instead of wages going up employers can pay less.

Good system indeed.

FelicityD

Was really interested to read this thread as I work for an organisation called the Resolution Foundation which tries to improve life for people on low and middle incomes through lobbying for better policy-making.

Lots of people find the way the WTC works infuriating and the changes to childcare support are certainly disincentivising people to work full-time.

We'd be really keen to speak to you about these issues so do get in touch if you'd like to know more.
Thanks.

chrisbur

The figures that you quote for working tax credit are misleading. For some reason you have recieved a higher weekly rate for your first year than your earnings warented. This may be because your payments were started late and so you had an element of back pay in your weekly payments, without seeing all your documents I do not know.

WTCs are reduced by 41 pence for each pound that your income goes up by so on your income differance there would be a £21.50 differance between the two years. In practice this reduction usually occurs some time after the actual increase in salary due to the disregard.

I have not checked your housing benefit figures as I know nothing about these but just possibly they are also affected by something in the same way as your tax credit figures.

sharnad

relic wrote: »

I have to agree I do find it odd, out of interest a few weeks ago I did a calculation that if I went down from 39 hours a week to 30 (basically working 4 days instead of 5) when the baby is born, i'd actually be a few quid better off every week.

thats good and then you would get to see the child more