Is £40,000 really a liveable income for families in the UK?

RenovationMan

Graham_Devon wrote: »

It's not how many hours or days that's the issue. Makes not a jot of difference.

What's the issue then?

From what I have read you have a problem with michaels working 2 days per week, reducing his income and increasing his WTC and CTC allowance. Obviously you think he should work a 5 day week to increase his income and reduce his CTC and WTC.

Do you also think that other people should work longer hours to reduce their CTC and WTC? Perhaps by taking second jobs, weekend and evening jobs in pubs and shops?

How many hours should people work before you feel it is OK for them to receive WTC/CTC? 40, 60, 80hrs per week? More?

michaels

Actually the equity in the house is not an issue with eligibility for any benefits as far as I know, it is having savings that stops me from getting more benefits, I could have used these savings to pay down the mortgage and thus been entitled to the additional benefits (or indeed gone out and spent them all) but chose not to.


As Graham is concerned about where I got my equity from the details are I have bought in 2001 and moved to a bigger house in 2010. During this period my DW (before she was my DW) also purchased a house and then sold it shortly after we were married thus we have benefited a fair amount from HPI. On top of that we extended the first house we had to increase its value over and above the extension costs, living through severe disruption whilst this happened rather than incur rental costs and we have now extended the property we purchased in 2010 which we spent several years finding aand chose because of its potential to extend (yes rather than buying a larger house and incurring more stamp duty).

I personally think that as we restrict the supply of land for housing purposes in this country that any gains accruing to home-owners due to the scarcity of housing should be taxed (ie no principal private residence capital gains relief), why should private individuals benefit from an overall scarcity of housing land, surely this should be a public gain?

The most I have ever borrowed has been about 4x income and I have an offset mortgage so I can choose how much I wish to repay and can also chose to keep the full advance outstanding and 'save' any extra funds elsewhere because the interest received exceeds the rate payable on the mortgage.

I agree that I am lucky (read prudent in the past) which allows me to live with a reduced income and hours whilst my employer is in a difficult position but as I say it is a small company who have shown loyalty to their staff and I don't dislike the work so why shouldn't I make that choice. I am not the one who devised a tax and benefits system with a marginal effective rate for low and medium earners with children that is a minimum of 72% but given that is the rate I am facing is it any surprise that I am willing to look at ways within the rules to avoid working and only receiving 28p in the £. As I say each extra £ will mean a lot more to me than £1 means to someone on 150k pa who is complaining about a marginal rate of 50%.

Personally I think that all British citizens should receive an annual citizens payment of 2-3k regardless of income and no other benefits and then there should be no tax allowance but merely a lower rate of say 10% for the first 10k of earnings, a mid rate of 35% for the next 40k and an upper rate of 45% thereafter (no separate NI) thus removing all distortions for people to work and hopefully also reducing any incentive towards tax evasion.

As already mentioned whatever my income has been I have lived extremely frugally: for example, my cars are from ebay bought several years old and held until they become too unreliable and costly to service, my servicing is mobile mechanic, my tyres are budget, my insurance is minimised with cashback, my mileage is as restricted as possible by avoiding unnecessary trips etc.

Anyone else want me to justify myself to them as I struggle to see what I am doing wrong.

Forgot to mention as pensions are in the news, I have been paying about 9% of my salary into my pension since I started work, despite having a standard product it seems to generally be worth less than I have paid in and as a money purchase scheme it will no doubt be worth f all when I come to retire, I am sure trying to purchase 1/45th of my final salary on retirement would have cost an awful lot more.

greggymagic wrote: »

This made me laugh - "Pesky Assets"

If it wasn't for the fact that you've got 450k equity in your house you'd be entitled to more....... "Welfare state"

silvercar

ringo_24601 wrote: »

So, you agree? If you only had your £25k income, you'd be in trouble... You get benefits and have additional sources of income? 500 quid tax free bonus.. Nice

Interest only mortgage. Guess you don't plan on living in that house in your old age

About half my friends have as Plan A to live in a family home on an interest only mortgage while they have children at home and then trade down to a smaller property when the children have flown the nest.

LydiaJ

RenovationMan wrote: »

What's the issue then?

From what I have read you have a problem with michaels working 2 days per week, reducing his income and increasing his WTC and CTC allowance. Obviously you think he should work a 5 day week to increase his income and reduce his CTC and WTC.

Do you also think that other people should work longer hours to reduce their CTC and WTC? Perhaps by taking second jobs, weekend and evening jobs in pubs and shops?

How many hours should people work before you feel it is OK for them to receive WTC/CTC? 40, 60, 80hrs per week? More?

If you read what Graham actually says, you might understand that his beef is with a system that is currently incentivising michaels to stick at 2 days a week even when more work might be available to him. He is not blaming michaels for responding to the incentives he finds himself facing.

RenovationMan

silvercar wrote: »

About half my friends have as Plan A to live in a family home on an interest only mortgage while they have children at home and then trade down to a smaller property when the children have flown the nest.

That's my Plan A. Our mortgage is so large that I doubt we will ever be able to pay it off. This doesn't matter because we won't want to live in a 5 bed farm house when we retire. We have sufficient equity already in the house to buy a nice 2 bed bungalow outright today. In 20odd years when we retire, that equity will have increased to allow us to buy a mortgage free 2 bed stone cottage with a decent sized garden to potter about in.

RenovationMan

LydiaJ wrote: »

If you read what Graham actually says, you might understand that his beef is with a system that is currently incentivising michaels to stick at 2 days a week even when more work might be available to him. He is not blaming michaels for responding to the incentives he finds himself facing.

Do you not think Graham can respond for himself?

Did you even read what I posted before you responded for him?

Graham_Devon

RenovationMan wrote: »

What's the issue then?

Is it not obvious?

Read what michaels says himself. Again, not having a pop, hes just being brutally honest.

I am not the one who devised a tax and benefits system with a marginal effective rate for low and medium earners with children that is a minimum of 72% but given that is the rate I am facing is it any surprise that I am willing to look at ways within the rules to avoid working

My issue, is intentionally avoiding work and looking for ways within rules to do so, to carry on taking from the taxpayer. The system somewhat encourages this. It should be stamped out.

I can't make it any clearer.

PasturesNew

RenovationMan wrote: »

Do you not think Graham can respond for himself?

It's called being kind and answering the question before the other person (Graham) will appear.

RenovationMan wrote: »

Did you even read what I posted before you responded for him?

Probably not..... is it compulsory then?

michaels

I know it is not what you are doing but it would appear that you feel that a system that taxes those on 120k at 40% but those on 25k at 72-95% is fair and that those facing the 72%+ tax rate should not be allowed to decide whether working for a minimal amount extra is worthwhile or not?

Graham_Devon wrote: »

Is it not obvious?

Read what michaels says himself. Again, not having a pop, hes just being brutally honest.

My issue, is intentionally avoiding work and looking for ways within rules to do so, to carry on taking from the taxpayer. The system somewhat encourages this. It should be stamped out.

I can't make it any clearer.

Graham_Devon

michaels wrote: »

I know it is not what you are doing but it would appear that you feel that a system that taxes those on 120k at 40% but those on 25k at 72-95% is fair and that those facing the 72%+ tax rate should not be allowed to decide whether working for a minimal amount extra is worthwhile or not?

What I feel is, regardless of the tax rates, which you have obviously worked out based on what you can get from the state as there is no such tax rate, your basing it on the benefits you would lose....

....NO ONE should be allowed to make their own decision as to whether they work or not, and then hold out their cap to others.

It's as simple as that to me.

I don't want to cause an issue between us, but I simply cannot agree with you on this. You are asking me, and all of the rest of us, to continue working, to in effect, pay you to have a choice whether you work or not.

Let's put it another way. Without that benefits system and your personal statement that you feel it's a choice whether you work and stop claiming or not...would you be working more now? Are you able to? Would you still sit back if they cut benefits for you?

I think we know the answer.

Again, I don't want to create bad feeling, but what you are doing is absolutely everything I am adamantly against. Especially making use of other avenues to reduce your savings so you continue to get better benefits income. I hope you se eme as being butally honest in response to your brutal honesty, and don't see it as just an attack....you said you don't see whats wrong with what you are doing. But theres people out there working two, three jobs, who have to contribute to you because you feel you have a right to sit back.

The benefits system is there to protect the needy. The ill. Those who have lost their jobs. Those who CAN'T work. It was there to protect you when your employer cut your hours. Thats precisely what it was for.

It's not there for you to sit back, burrow money into your future to take more from the system and turn down extra work because you have done everything with the "rules".