2012/13 Tax Credit Cuts

Austinhead

Good luck with the new arrival in January.

I too have been looking for information or guidelines on tax credit bandings e.t.c. My partner's wages went up by £2k gross last year so we lost all our WTC - about £2k worth. OK so like for like we are the same, except his £2k was pre tax and NI and losing WTC removes dentists, prescriptions e.t.c. so in effect because he got taken on permanately, we are financially worse off.

People on this forum really do fail to realise the people's circumstances change. We have 3 kids too, but our joint income is only £20k because of massive changes in circumstances over the last couple of years (all our kids are over 3 before anyone jumps on that bandwagon !). I don't know what the answer is. As soon as you go back FT childcare costs go up massively and tax credits go down massively. End up being worse off !!

Sue Durex. It's the way forward.

Rant over.

zagfles

Austinhead wrote: »

Good luck with the new arrival in January.

I too have been looking for information or guidelines on tax credit bandings e.t.c. My partner's wages went up by £2k gross last year so we lost all our WTC - about £2k worth. OK so like for like we are the same, except his £2k was pre tax and NI and losing WTC removes dentists, prescriptions e.t.c. so in effect because he got taken on permanately, we are financially worse off.

People on this forum really do fail to realise the people's circumstances change. We have 3 kids too, but our joint income is only £20k because of massive changes in circumstances over the last couple of years (all our kids are over 3 before anyone jumps on that bandwagon !). I don't know what the answer is. As soon as you go back FT childcare costs go up massively and tax credits go down massively. End up being worse off !!

Sue Durex. It's the way forward.

Rant over.

You didn't lose £2k WTC because your income went up £2k. The withdrawal rate isn't 100%, it's 41%. If you lost £2k WTC there must have been some other change as well as the income increase.

If you had an income increase the previous year that could have had an effect as there is disregard for the first year of any increase.

zagfles

JMartin wrote: »

I'm aware that many live on a lot less and that we are very fortunate for what we have. My comment is really that it's easy for those who have money and have never had to worry about it to sit in parliament and dictate that they will take what is essentially a lifeline for many away overnight

They are not "taking a lifeline away", you've been reading too much biased media bulls**t or not understanding. The main change they are making is to remove the upper £40k threshold for the family element of CTC and start tapering it immediately after the rest of tax credits. This will only affect those who only get the family element, generally those on higher incomes, who were only getting £10 a week anyway. This was never a "lifeline".

just because they think it costs too much. The Treasury has admitted today that they are placing many more children in poverty but they don't care because it's not the Tory way to care about the poor.

Nuclear weapons cost too much...don't see them doing away with the arms budget.

Right - now go and look up what their definition of "poverty" is and see if relates in any way to what most people think of as "poverty".

Then look up the cost of nuclear weapons and compare it to the social security budget.

JMartin

Hmm, according to the link above provided by MrsManda:

From 6 April 2012, the income limit for you will depend on your own situation. But as a very rough guide, you might not be able to get Child Tax Credit from 6 April 2012 if:

• you have one child, and your annual income is more than around £26,000
• you have two children, and your annual income is more than around £32,200

Granted, I could be wrong but at the moment a couple with household income of £26,000 and one child will receive £545 per year in CTC. This is exactly the amount I currently receive with family income of £35,000 and whether it's a lifeline or not really depends on your personal circumstances, where you live, how far you have to travel to work and the impact rising transportation costs have had across the year on family budget. We would really struggle without that extra £10 a week so I summise that a family on £26,000 would also really struggle.

Poverty is relative; however there is a definition and the official figures show that more children will be in poverty as a result of these changes. These are not disputed by the Government so why do you dispute them?

Yes, the benefits budget is far higher than the defence budget but one is necessary and the other isn't! It really doesn't matter which part of the defence budget is targetted in my comment, I choose Trident because it's of no use whatsoever to the country. It'll never be used and hardly is effective in deterring modern day terrorists.

JMartin

Just to be clear, I'm not claiming poverty...that doesn't stop me defending those who find themselves in poverty.

zagfles

JMartin wrote: »

Hmm, according to the link above provided by MrsManda:



Granted, I could be wrong but at the moment a couple with household income of £26,000 and one child will receive £545 per year in CTC. This is exactly the amount I currently receive with family income of £35,000

Yes. But when your third child is born you will get more and you won't be affected at all by the change to the family element threshold.

and whether it's a lifeline or not really depends on your personal circumstances, where you live, how far you have to travel to work and the impact rising transportation costs have had across the year on family budget. We would really struggle without that extra £10 a week so I summise that a family on £26,000 would also really struggle.

What about a family on £16,000?

The general rule is that as your income increases your tax credits reduce. They reduce by a fixed percentage, 41%, of your increase in income. But there is an anomaly, in that the last £545, the family element, is retained until £40,000. This anomaly is being removed.

You could ask why now, a family with 1 child on £26,000 gets the same in tax credits and a family with 1 child on £40,000.

Poverty is relative; however there is a definition and the official figures show that more children will be in poverty as a result of these changes. These are not disputed by the Government so why do you dispute them?

OK, assuming you actually want to understand rather than go with the tired old soundbites of "the evil Tories don't care about the poor" etc...

The change which will "increase child poverty" is nothing to do with the change you are talking about, ie the change to the family element threshold. That was announced ages ago. The change to do with "child poverty" is the change announced in the autumn statement concerning the child element of CTC. In any case it won't increase poverty relative to now, it will increase poverty relative to this govt's original plan.

The original plan of thisgovt was to increase the child element of CTC £110 above inflation in April 2012. This govt has already increased the child element of CTC way above inflation - 11% in April 2011, and this follows year-on-year large above inflation increases by the previous govt.

The plan has now changed not to apply this above inflation increase to the child element of CTC. It will still be increased in line with current inflation figure of 5.2%, just not 5.2% plus £110.

Obviously this change in plan will result in people in being poorer than they would have been if the govt had stuck with its original plan for an above inflation increase. But it won't result in people starving, or even people at the bottom being worse off in real terms. It's still going up in line with inflation - which is more than can be said for most peoples' wages.

It's a bit like your boss giving you a 10% rise every year, but one year saying "sorry can't afford your usual rise this year, you'll only get inflation". Then you complaining you're poorer as a result. You're not any poorer, just a little less richer than you would have been with your usual rise.