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

kabayiri

wotsthat wrote: »

...
Eventually the credits should be done away with altogether and tax free thresholds increased as part compensation.

This seems such an obvious point I'm surprised it wasn't adopted more under the Labour era.

The other problem with things like WTC concerns running costs. It has been consistently 3 times more expensive to run than projected in it's early years. It also paid out more than it should consistently in the early years, by several billion or so.

chewmylegoff

Tax credits are !!!!!!, in part because they phase out in steps. There are situations in which earning £1 more will lead to a loss of £2,000 of tax credits. Further, tax credits already paid will be clawed back if your income goes up. Therefore the further you get into the tax year, the lower the incentive to increase your income is. I'm not surprised Michaels has made the decision he has. In the same situation I would do exactly the same, as, I expect would all of the keyboard warriors on this thread who claim otherwise.

Graham_Devon

RenovationMan wrote: »

He's not answering because he realises the trap he's put himself in.

He states that he's against 'someone actively declining work and finding ways to increase benefits income' but Graham knows that most able people are capable of working additional hours to increase their incomes - thus reducing their CTC and WTC.

People can work evenings and weekends in additional jobs, deliver newspapers, work in pubs/shops, etc. etc. and up their income. They don't chose to do this, and neither does Graham, so by "Graham's Law" they are actively declining work in order to increase their tax credits.

I suspect that Graham's definition of the minumum number of working hours where it is acceptable to receive tax credits would be exactly the number he is contracted to work in his current job.

I've already answred it. The number of hours you work is completely irrelevant.

Its the income generated from working thats relevant. Whether thats generated working 2 hours or 84 hours, it makes not one jot of difference to any of this conversation.

RenovationMan

Graham_Devon wrote: »

I've already answred it. The number of hours you work is completely irrelevant.

Its the income generated from working thats relevant. Whether thats generated working 2 hours or 84 hours, it makes not one jot of difference to any of this conversation.

Nice attempt at a dodge Graham but the point still works and I'm not letting go.

Most able people can increase their income in some way or other (i.e. evening or weekend jobs), are you saying that those who don't at least seek to increase their income should be ashamed of themselves for receiving increased tax credits?

The_White_Horse

RenovationMan wrote: »

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.

i don't understand this at all. your signature says you have paid off 47k in 3 years, so why is your mortgage to big to pay off? You should have it cleared in about 18 years, never mind 25. Plus your house price never seems to fluctuate at all.

Graham_Devon

RenovationMan wrote: »

Nice attempt at a dodge Graham but the point still works and I'm not letting go.

Most able people can increase their income in some way or other (i.e. evening or weekend jobs), are you saying that those who don't at least seek to increase their income should be ashamed of themselves for receiving increased tax credits?

I've quite clearly stated, several times now, what my issue is.

Poster says "I will do what I can within the rules to refrain from working and receive benefit".

I state "i think thats wrong for reasons X Y and Z" and unfortunately it's ended up going down the route it has.

If you do not think this is wrong, just say so, and be done with it. If this really needs to turn into a personality contest, then I guess that's where it will go.

michaels

What if I had said I had given up my extra part time job (on top of a full time job) to spend more time with the family as because of the impact of tax and tax credits I was only earning a very small amount from doing the job - would that also have been morally wrong?

RenovationMan

Graham_Devon wrote: »

I've quite clearly stated, several times now, what my issue is.

Poster says "I will do what I can within the rules to refrain from working and receive benefit".

I state "i think thats wrong for reasons X Y and Z" and unfortunately it's ended up going down the route it has.

If you do not think this is wrong, just say so, and be done with it. If this really needs to turn into a personality contest, then I guess that's where it will go.

Phew it's hard to pin you down Graham, you're wriggling about like a worm on a hook.

So what you are saying is that:

If you work a 5 day week at a single job and earn £30k per annum and receive tax credits to top up your income then that's OK.

If someone else works a 4 day week at a single job and earns £30k per annum and receives tax credits to top up their income that's BAD.

You say it's bad because you feel that the 4 day week person should work a further day in order to increase his income and reduce his tax credits.

Well to take this further, if I work a 6 day week, am I allowed to look at your measly 5 day a week working and pour scorn on you for "refraining from working and receiving benefits"?

LydiaJ

silvercar wrote: »

That could easily be corrected by raising the minimum number of hours required to get credits to 35 hours a week.

I suspect they don't make that simple change to allow/ encourage one parent families to work school hours only or to encourage people into part time working as a first step out of benefits.

It would be more effective to taper them according to how many hours you work, with no stark cut-offs, so that working more hours always makes you better off.

For example, there's a single mother of some kids at my kids' school. She's been on benefits since her kids were little, and is now looking to go back to work. Her kids are still fairly young and she'd like to begin with school hours or a little more, but not full time. One of the jobs she looked at was 14 hours a week, and the hours would have meant she'd have needed a little wrap-around care, but not much - something like two days a week of after school club, or something like that.

She wants to work more than 14 hours, but considered taking this job and then looking for some other hours doing something else as well. It's not feasible, though, unless by some miracle she could find extra hours to start the same week as the 14 hour job. This is because if she takes the job, she loses all her jobseeker's money, she earns not very much, she has to pay for childcare, and because she's not doing 16 hours, she doesn't qualify for any WTC help with the childcare. So she'd be significantly worse off than she is staying on benefits waiting for a job opportunity that's 16+ hours/week.

wotsthat wrote: »

My view is that CTC's and WTC's should be reduced. This would have two benefits

- it removes or reduces the disincentive to work longer hours
- it would deal with one of the major reasons, IMO, that the UK is attractive to low skilled migrant European labour. This would relieve pressure of services and housing.

Eventually the credits should be done away with altogether and tax free thresholds increased as part compensation.

If the purpose of WTC was just to top up the wages of low paid workers, then that would make sense. However, it also has a childcare element that is supposed to make it worthwhile for parents to work even if they have to pay for childcare to do so. Merely not having to pay tax on earnings would still leave parents out of pocket if paying for nursery fees for a couple of kids and earning minimum wage, for example.

lostinrates

michaels wrote: »

What if I had said I had given up my extra part time job (on top of a full time job) to spend more time with the family as because of the impact of tax and tax credits I was only earning a very small amount from doing the job - would that also have been morally wrong?

Michaels...tbh...this reminds me a little of Carolt's situation with child benefit an th furore over that

As it stands you are undisputatedly legally to be doing what you are doing, but I think its fair that people raise this to be a crazy situation that people are disincentivised from working in situations such as yours.