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Is this calculation right?

Hello. Not sure if this is the best place for my question but here goes.

My husband and I are married and have 2 kids. We live in a small flat in London. I look after the kids as they are young and i do not work. My husband's job earns him £45,000 each year. He works full time and goes into London by transport. He has to buy his own travelcard which is £35 something each week. He gets home late and really hates his job. After tax he will be earning £33,000 this year.

I just been fiddling with one of the benefit calculators and I typed in our finances etc. I was a little shocked as it seems that if my husband got a new job working only 25 hours, even on a salary of £15k, he would bring home more or less the same income as we would be able to get child tax credits which we had lost, working tax credit and we would get a lot of help towards our rent and some help towards council tax. I thinik this is unbelieveable and I am not sure it is correct. It doesn't make sense to me that he could be working less hours and earning less but we would have the same income as before.

Can anyone confirm if the calculation is right?
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Comments

  • Horseunderwater
    Horseunderwater Posts: 3,406 Forumite
    1,000 Posts Combo Breaker
    To get a more accurate result you need to advise if you are in social housing or private rented housing. If the latter then you need to look up the rate that your Local housing authority pay in your area and that is the amount that you put in for the rent I think - someone else will be along to help further. If social housing then you need to find out how much your LA pays for how many bedrooms you would qualify for which may well be a 2 bed rate as this depends on children's ages and sexes. And the result may be that you're would not be better off.
  • pmlindyloo
    pmlindyloo Posts: 13,099 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    normajeans wrote: »
    Hello. Not sure if this is the best place for my question but here goes.

    My husband and I are married and have 2 kids. We live in a small flat in London. I look after the kids as they are young and i do not work. My husband's job earns him £45,000 each year. He works full time and goes into London by transport. He has to buy his own travelcard which is £35 something each week. He gets home late and really hates his job. After tax he will be earning £33,000 this year.

    I just been fiddling with one of the benefit calculators and I typed in our finances etc. I was a little shocked as it seems that if my husband got a new job working only 25 hours, even on a salary of £15k, he would bring home more or less the same income as we would be able to get child tax credits which we had lost, working tax credit and we would get a lot of help towards our rent and some help towards council tax. I thinik this is unbelieveable and I am not sure it is correct. It doesn't make sense to me that he could be working less hours and earning less but we would have the same income as before.

    Can anyone confirm if the calculation is right?

    Difficult to tell if this is correct as we haven't got all the information - rent /council tax.

    However, having had a play around myself then it seems possible.

    I hope you are thick skinned because you are about to launch a tirade of people talking about misuse of the system/benefits are for those who can only get a low income job/is this the way to live your life/what happens when your children are older and you lose the child tax credits blah blah blah.

    Our benefit system is very flawed. The over-riding concern seems to be that children are not disadvantaged because of their parents' inability to find work etc etc.

    It would be interesting to find out whether this will still be the case when Universal Credit comes in. Not sure whether it will make much different when children are involved, although the cap on rental allowances in London may make a difference.
  • 19lottie82
    19lottie82 Posts: 6,032 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 23 May 2013 at 5:06PM
    My OH told me he used to work PT when he was a single parent to his 2 children, after he had left his ex and was really struggling with child care etc

    He worked 16 hours a week for NMW £6 ish? = £100 a week ish, so £5200 a year and got about £800 a month + Council Tax Benefit (£100 ish) + £400 LHA, so thats about

    £1733 a month?

    That's pretty shocking actually now I think about it, considering if he worked FT and earned £27,000 a year he'd get the same as wages, and no benefits (well child benefit)

    No wonder people have no incentive to work.
  • Caz3121
    Caz3121 Posts: 15,870 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I guess you have to weigh up long term the impact of giving up a well paid job and how this would affect his career

    There are many people that post on here when all their child related benefits stop and they have continued to work part time on a low income and they are left in a position where they need to take second jobs/downsize to cheaper property etc...

    Whilst the £30k deficit is made up partly with benefits whilst there are children what would happen when there are just the 2 of you and he has been out of full time well paid work for a number of years?

    The system has come across a lot of flack for this very scenario you describe where people don't see the point in working full time as they can end up with similar £s for working part time and topping up with benefits. The purpose of the benefits system was never to support people's lifestyle choices but more to support people who could not support themselves. With more part time workers there is less income tax going into the pot so there will be less money to spend on benefits...if this happens 2-3 years down the line, would he be confident he can walk back into a well paid job?
  • princessdon
    princessdon Posts: 6,902 Forumite
    Yeah it sounds about right, yes it's totally crazy. The good news is when he earns a bit more they take more tax and remove your child benefit too :p

    However, this is due to change under Universal Credit in part, as they will assign conditionality to people have to seek work (and this includes Stay at Home Parents) depending on the income and the age of the child.

    Tax credits have long allowed lifestyle choices and what is even more crazy is you can have thousands in the bank and still claim them and many do have high level savings and claim.

    Crazy ole world ain't it!
  • Dogger69
    Dogger69 Posts: 1,183 Forumite
    willber wrote: »
    And a couple where one is over 61 and the other is much younger, where both are moderately disabled - Middle rate DLA, both claim to care for each other, are entitled to Income Based ESA/JSA of about £500 a week plus housing and council tax benefit!

    Familiar scenario there Andy? :p
  • The person in the £45k job is likely to have more opportunities for career progression than the lower paid job.
  • willber wrote: »
    Why would you concern yourself with career progression when the lower income job plus benefits provides enough income as it is?

    My attitude is why knock yourself out with work if you don't have to. Career progression normally brings longer hours, a more stressfull working life and poorer health because of that stress.

    Don't you think that being happy with enough would be preferrable to having a heart attack at 50?

    Career progression also brings higher earning potential. So they'll be earning more in the future, proportionately more than the person on £15k who worked part time.
  • Teahfc
    Teahfc Posts: 1,468 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    It sees short term a ideal scenario, how will things be in 2-5 years or 5-10 years though ? The Government Maths are not adding up where benefits keep getting paid for doing less work, who predicted the £500 per ceiling ? Next it will be £450 r even £400 then what happens with less career prospects ?
    May be you are a family that is not money and career motivated and could live just over the bread line for years to come ?
    Giving up a full time job until you get another one you enjoy seems madness to me.
    "Man invented language to satisfy his deep need to complain."


    ''Money can't buy you happiness but it does bring you a more pleasant form of misery.''
  • bazza5070
    bazza5070 Posts: 142 Forumite
    Go on the benefits calculator and work it out.....

    If you are a couple, neither working, have 3 school age kids and live in rented accommodation you will have more money in your pocket each month than the person with the same circumstances who is working for average wage (£26,000) and has a partner at home looking after the 3 kids.

    One of the big advantages is less stress, not having to worry if theres enough to pay the bills, mortgage etc each month - fancy a holiday, get an interest free budgeting loan and pay it back a few quid a week, I often ask myself who is the mug?

    This is why we need a complete review of the benefit system as there are too many people with the attitude of 'why work when you can get it for nothing'. :eek:
    Skint but Debt Free at Last :T
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