New WFTC budget means we're down by £200 p/m

niftythrifty33

Don't usually post but spend hours reading other posts but am bit worried about how were going to manage.
Last tax year 2011/2012 i worked 2 part time jobs and my husband works full time. We have 3 kids. I told the tax credit office as soon as I started the 2 jobs in 2011. When I did 1 p/t time job we always had around £57 p/w from them. I knew this would reduce this year witht he new claim as I'd earned more. I found the renewal letter very confusing but it looked like we would still get some money.
I noticed last week we hadnt had a payment since Aug so I called them up...
Aparently, as I went back to 1 p/t time job in March I had to give an estimate of how much we'd earn 2012/13. They say because of this they wont pay me anything but if the estimate is correct by next April we will get £300 lump sum (this is to avoid overpmt which I know is a problem for lots of people). I understand all this as I obviously earned more last yr.
What I can't understand is next April our claim will be as it has been for years (1 full time wage, 1 p/t) this has always meant we get around £57 p/w but man on the phone said due to new budget cuts will now be £17 p/w. How can this be right? Surely they cant make budget cuts that huge?
We have lost £200 p/m now and we already are on such a tight budget and still cant get out of our O/D. We work really hard, dont spend much at all, never go out. Buy all reduced food. etc etc sorry for the long post just wanted to know if anyone else was facing this. Also wanted to say if you havent already, call the tax credit office and get an idea of how much you will get next yr as you may need to start planning now!

cheepskate_2

What is the combined income of you and your husband. How many children do you have, childcare etc.

wants.to.be.debt.free

niftythrifty33 wrote: »

Don't usually post but spend hours reading other posts but am bit worried about how were going to manage.
Last tax year 2011/2012 i worked 2 part time jobs and my husband works full time. We have 3 kids. I told the tax credit office as soon as I started the 2 jobs in 2011. When I did 1 p/t time job we always had around £57 p/w from them. I knew this would reduce this year witht he new claim as I'd earned more. I found the renewal letter very confusing but it looked like we would still get some money.
I noticed last week we hadnt had a payment since Aug so I called them up... I can't believe you havn't noticed the lack of payments from Aug to last week - At least 5 weeks!
Aparently, as I went back to 1 p/t time job in March I had to give an estimate of how much we'd earn 2012/13. They say because of this they wont pay me anything but if the estimate is correct by next April we will get £300 lump sum (this is to avoid overpmt which I know is a problem for lots of people). I understand all this as I obviously earned more last yr.
What I can't understand is next April our claim will be as it has been for years (1 full time wage, 1 p/t) this has always meant we get around £57 p/w but man on the phone said due to new budget cuts will now be £17 p/w. How can this be right? Surely they cant make budget cuts that huge?
We have lost £200 p/m now and we already are on such a tight budget and still cant get out of our O/D How can you be on such a tight budget yet not notice lack of payments. We work really hard, dont spend much at all, never go out. Buy all reduced food. etc etc sorry for the long post just wanted to know if anyone else was facing this. Also wanted to say if you havent already, call the tax credit office and get an idea of how much you will get next yr as you may need to start planning now!

Please see comments!!!

Pedent

niftythrifty33 wrote: »

What I can't understand is next April our claim will be as it has been for years (1 full time wage, 1 p/t) this has always meant we get around £57 p/w but man on the phone said due to new budget cuts will now be £17 p/w. How can this be right? Surely they cant make budget cuts that huge?

It's impossible to say exactly why this is without more information from you, but three things have changed that might explain the fall of £40/week:

(1) The withdrawal rate has been increased from 39% to 41%, so if you earn the same amount above the income threshold as before, then your award will be lower.

(2) From 2011/12 claimants have only been entitled to 70% of eligible childcare costs, rather than 80%. For anyone claiming the full £300/week, that has meant a fall of £30/week.

(3) There's now an income disregard for falls in income as well as rises. If your income falls by up to £2500, then your award won't be increased until the following year. If it falls by more than £2500, then in the first year your award will be just under £20/week lower than it would have been under the old formula, before increasing in the second year.

There's also been an increase in the child element which for three children will give you £7.79/week more than before, but for most claimants that will have been more than cancelled out by changes (1) and (2).

no-oneknowsme

wants.to.be.debt.free wrote: »

Please see comments!!!

Maybe the tax credits were paid weekly into an account and allowed to build up over the 4 weeks to pay a standing order or direct debit due to come out of the account?

Maybe this is how the OP has only just noticed last week that the tax credits havent been paid? Maybe they received notification from their bank or another organisation to say that a direct debit had been returned unpaid?

zagfles

Pedent wrote: »

It's impossible to say exactly why this is without more information from you, but three things have changed that might explain the fall of £40/week:

(1) The withdrawal rate has been increased from 39% to 41%, so if you earn the same amount above the income threshold as before, then your award will be lower.

(2) From 2011/12 claimants have only been entitled to 70% of eligible childcare costs, rather than 80%. For anyone claiming the full £300/week, that has meant a fall of £30/week.

(3) There's now an income disregard for falls in income as well as rises. If your income falls by up to £2500, then your award won't be increased until the following year. If it falls by more than £2500, then in the first year your award will be just under £20/week lower than it would have been under the old formula, before increasing in the second year.

There's also been an increase in the child element which for three children will give you £7.79/week more than before, but for most claimants that will have been more than cancelled out by changes (1) and (2).

Yes, although I presume you're comparing the 2010/11 tax year to this year, since the changes (1) and (2) were made in April 2011. In which case the child element has gone up from 2300 to 2690, ie £22.50 per week with 3 children.

Childcare could be relevant but with 3 kids the increase in the child element will almost always be more than the drop due to increased withdrawal rate.

zagfles

cheepskate wrote: »

What is the combined income of you and your husband. How many children do you have, childcare etc.

Budget cuts can be huge. This year they brought the income to receive the basic ctc down from £52k to £24k

That particular cut (removal on second income threshold) was £545 max. Only applied to people who only got the family element.

Pedent

zagfles wrote: »

Yes, although I presume you're comparing the 2010/11 tax year to this year, since the changes (1) and (2) were made in April 2011. In which case the child element has gone up from 2300 to 2690, ie £22.50 per week with 3 children.

Yes. The OP says that in 2011/12 she worked two jobs so had higher earnings. She's asking why now that she's gone back to just one job as before (which must mean 2010/11 and previous) her award isn't as high as it was then. The comparison is therefore between 2012/13 and 2010/11 and previous, so changes that came in in 2011/12 are relevant.

niftythrifty33

Thanks all for your replies. Pendent, I have tried to understand what you're saying but I really find it confusing. You obviously know lots about it, I cant make sence of how they do the calculations.
Just to ans a few questions. We dont have childcare costs. I earn 8k OH earns 21K.
w.t.b.d.f why do you shout at me in large red letters? theres just no need, I never post on here and you might put people like me off coming back for help if you just shout back at them in this way! I use cash only, a very small amount for a family of 5, I take it out weekly and budget/mealplan etc. our OD is so bad that I just kept doing this every Friday knowing that as we havent touched the bank acct/used our card, the balance will get better. I do a proper check monthly of all DD's and this is when I saw it. You sound just like me when I shout at my kids for being naughty!! ggrrr

whats a withdrawal rate? Also, surely if the money for having kids has gone up and I dont use childcare wouldnt this mean I would be getting more than 2010/11? I can understand this yrs going down as I did the 2 p/t jobs but I just cant get my head round next yrs reduction.

zagfles

If you gave them the estimate quoted above then you should be getting at least £57pw now. Don't see why they're saying £17pw. Are you sure they have the correct estimate?

niftythrifty33

It funny you say that as thats exactly what we always had before 2011. I know I wont get that right now due to earnings last yr but I really hope you're right. Maybe they havent got the right info. I have been doing full time last couple weeks as were short staffed (I know this will affect next yrs application but I didnt really have much choice), this is why I havent felt like calling them as I'm so exhaused in the evenings but I will check on saturday and make sure they have the correct info. Thanks