Are we allowed to save?

Pedent

kirstle99 wrote: »

We only get tax credits for the childcare. So obviously we pay some of this ourselves anyway. If we didn't have to pay for childcare we wouldn't be entitled to any tax credits I don't think, or a really really low amount.

Hmm. Maybe we need to re-think and just save when youngest goes to school in 3 years, when we aren't paying for any childcare.

Still gutted though

It's all a bit complicated, but I don't think you need to feel gutted.

If the planned timetable for implementation holds (and there are lots of reasons to think that it won't), then you'll be migrated from tax credits to Universal Credit some time between October 2013 and the end of 2017.

Until then you'll be assessed for tax credits, and you can save as much as you want to without it affecting your award. So there's no disadvantage to having savings between now and then.

By September 2015, your youngest will have started school, you won't have childcare costs, and so you won't receive anything then anyway, irrespective of whether you're assessed for tax credits or Universal Credit, with savings or without. So there's no disadvantage to having savings after September 2015, which may well be before or soon after you're migrated to Universal Credit.

So it's just the period between October 2013 and September 2015 that could be a problem.

Under Universal Credit, new claimants won't get anything if they have over £16k of savings, and will lose out if they have over £6k of savings. However, those who are moved over to Universal Credit from existing benefits will receive transitional protection, so that they won't lose out at the point of transition. The value of transitional protection will be eroded gradually over time, but is only removed all in one go if your circumstances change triggering a reassessment.

That means that for you to lose out because of your savings, you would have to be migrated over to Universal Credit, have saved significantly more than £6k, and then have a change in circumstances that removes your transitional protection, all between October 2013 and September 2015. If that set of circumstances did materialise, then you'd only be affected for a fairly short period of time, and the worst that would happen is that you'd have to spend some of your savings (until you only had £6k left, when they would no longer make a difference).

If I were you, then I think I'd risk it and start saving now. If I got migrated to Universal Credit very early, then I might pause saving at that point, and try to make sure that I kept my transitional protection until September 2015, but that would be fairly unlikely.

At least make sure that you've saved £6k before your youngest starts school, as you can do that without any risk at all.

Boots888

Pedent wrote: »

It's all a bit complicated, but I don't think you need to feel gutted.

If the planned timetable for implementation holds (and there are lots of reasons to think that it won't), then you'll be migrated from tax credits to Universal Credit some time between October 2013 and the end of 2017.

Until then you'll be assessed for tax credits, and you can save as much as you want to without it affecting your award. So there's no disadvantage to having savings between now and then.

By September 2015, your youngest will have started school, you won't have childcare costs, and so you won't receive anything then anyway, irrespective of whether you're assessed for tax credits or Universal Credit, with savings or without. So there's no disadvantage to having savings after September 2015, which may well be before or soon after you're migrated to Universal Credit.

So it's just the period between October 2013 and September 2015 that could be a problem.

Under Universal Credit, new claimants won't get anything if they have over £16k of savings, and will lose out if they have over £6k of savings. However, those who are moved over to Universal Credit from existing benefits will receive transitional protection, so that they won't lose out at the point of transition. The value of transitional protection will be eroded gradually over time, but is only removed all in one go if your circumstances change triggering a reassessment.

That means that for you to lose out because of your savings, you would have to be migrated over to Universal Credit, have saved significantly more than £6k, and then have a change in circumstances that removes your transitional protection, all between October 2013 and September 2015. If that set of circumstances did materialise, then you'd only be affected for a fairly short period of time, and the worst that would happen is that you'd have to spend some of your savings (until you only had £6k left, when they would no longer make a difference).

If I were you, then I think I'd risk it and start saving now. If I got migrated to Universal Credit very early, then I might pause saving at that point, and try to make sure that I kept my transitional protection until September 2015, but that would be fairly unlikely.

At least make sure that you've saved £6k before your youngest starts school, as you can do that without any risk at all.

I think this is an excellent post. It it was it is and it's good to have this perspective. ie, it hasn't happened yet. I'll try putting it into practise myself in my circumstances.;)



:eek:

nannytone_2

im a compulsive saver ... still i only manage about £50 a month.

if you can afford to save ib regards to a house deposit .....
it makes me wonder if tax credits arent way too generous

rogerblack

darlyd wrote: »

I save under my mattress, may not incur interest but at least I do not have to worry about it. Not that We claim any benefits, I don't even claim the voucher scheme for child care, cant be bothered.

Not declaring cash savings in the event of any means tested benefit claim amounts to benefit fraud.

banner188

zagfles wrote: »

How, exactly? Most low earners will be better off under UC as the withdrawal rate is lower.

Plus as I said transitional rules will protect those with saving claiming tax credits.

Most low earners will be better off in their differential between them and non working claimants. They will not be better off than now, in fact worse, but there will be more of an incentive to work because non workers will be worse off in relation. This is discounting children of course because we all know that those with loads of kids won't be touched and the money will keep rolling in.

banner188

pmlindyloo wrote: »

Many people do not see tax credits as benefits but they are.

If you think about it logically, would you be able to save if you weren't receiving the tax credits? If you couldn't then effectively the tax payer's money is being used to give you a deposit for a house.

You could of course end your claim for tax credits, find ways of upping your income and decreasing your expenditure and save that way.

Or, you could take advantage of the current benefit system and save with your tax credits and when Universal Credit comes in end your claim, up your income and decrease your expenditure.

In order to save for a deposit you have to make some sacrifices.

Plenty of tips on here on how to do that!

Far more complexity than this. Big organisations pay dirt low wages, pay tiny taxes and make big profits. Who is this money coming off the backs of? No-one will ever answer that question but at least tax credits goes some way to making it up.

MissMoneypenny

41_and_i_know_it wrote: »

You deserve a house it is security for your 2 children

Only if you can afford to keep paying the mortgage and you don't buy at a boom time.

Don't forget that a house in negative equity, is just a rental with debt. Plus you have to pay for your own repairs.

MissMoneypenny

zagfles wrote: »

Plus as I said transitional rules will protect those with saving claiming tax credits.

Even those that get moved onto UC because of a significant change?

zagfles

banner188 wrote: »

Most low earners will be better off in their differential between them and non working claimants. They will not be better off than now, in fact worse,

Do you have any actual credible evidence for this? From what I've read (eg the white paper) the out of work amounts will be about the same, and the withdrawal rate will be lower so low paid people (eg min wage working under 16 hours) will be much better off than now. Since they won't have the combined 96% withdrawal as now, it'll be 65%. But there won't be the sudden cliff edge when WTC kicks in at 16/24/30 hours as now.

If you have any evidence to the contrary please post it. Or if you're assuming that will be the case "because that's what Tories do", I suggest you head off to discussion time as that's their level of debate

zagfles

MissMoneypenny wrote: »

Even those that get moved onto UC because of a significant change?

It's not really clear what would happen if the "major change" was something you don't have to report (eg something which would increase entitlement to tax credits). We've discussed this in previous threads...