Proper interpretation of a tax credits table

gilbutre

Hi everyone,

I'd like to make sure I properly understood a table I found on http://www.hmrc.gov.uk/taxcredits/people-advise-others/entitlement-tables/work-and-child/work-no-childcosts.htm ("You work, have children but pay no childcare" section).

What I understand from this table is that, when you actually earn £30,000 (that's £2500 a month) as a couple, you will still get no less than £3,735 a year if you have 3 children.

It strikes me because that's a quite comfortable income, yet such people would still receive a large amount of tax credits money on top of it from the welfare system.

Did I understand correctly? And if so, is it not a bit excessive?

gilbutre

Actually my question more was about understanding the table, not whether it's correct. And even though, can't we share opinions on this forum?

p00hsticks

gilbutre wrote: »

can't we share opinions on this forum?

Yes, but not on this board, which is intended for straight forward questions relating to eligibility for benefits, not for opinions on benefits policy - there are other places on the forum for that.

I suggest you read Martin's "Sticky" post on the purpose of the board, which you can find at the top of the board or here
https://forums.moneysavingexpert.com/discussion/365935

gilbutre

Thanks for the clarification, I didn't know about this particular forum's function.

But I actually have a question about entitlement now: I just went to Tax credits calculator on HMRC website, and I obtain £1065.05 in total (work credits + child credits) for an income corresponding to the second line of the table (and this table says I should get £7,165, not £1065.05 !)

Is it possible that one of the two - calculator or table - has not been properly updated? Otherwise, why this discrepancy? I obviously am missing something.

zagfles

I think the HMRC calculator gives what you'd get from now till the end of the tax year, ie 2 months worth, whereas the table gives what you'd get for the whole tax year.

zagfles

gilbutre wrote: »

Hi everyone,

I'd like to make sure I properly understood a table I found on http://www.hmrc.gov.uk/taxcredits/people-advise-others/entitlement-tables/work-and-child/work-no-childcosts.htm ("You work, have children but pay no childcare" section).

What I understand from this table is that, when you actually earn £30,000 (that's £2500 a month) as a couple, you will still get no less than £3,735 a year if you have 3 children.

It strikes me because that's a quite comfortable income, yet such people would still receive a large amount of tax credits money on top of it from the welfare system.

Did I understand correctly? And if so, is it not a bit excessive?

No, bear in mind that the UK has a system of independant taxation, so for instance someone earning £30,000 to support a family of 5 would only get one personal allowance.

Most other countries assess tax on the family, so non earners can use their personal allowance against the family income. For example in France a family of 2 adults and 3 kids would get 4 personal allowances. If this were the case in the UK, such a family would pay no tax at all, instead of paying around £6500 in tax & NI here.

Generally families on average incomes lose far more due to independant taxation than they gain through tax credits and child benefit.

gilbutre

Thanks a lot for your answers !