Better off without pay rise and claiming working tax credits?

JonBristol_2

Hi, I am currently receiving working tax credits as I am on a low income. I receive just over 50 pounds a week. My employer has told me they may give me a pay rise in a couple of months which will result in me earning about an extra 25 pounds a week but then I might not be entitled to working tax credits as I think I will be over the annual amount that I need to be under to claim.

So am I better off not receiving a pay rise so I can stay on working tax credits? This does not seem right to me.

boo_star

JonBristol wrote: »

Hi, I am currently receiving working tax credits as I am on a low income. I receive just over 50 pounds a week. My employer has told me they may give me a pay rise in a couple of months which will result in me earning about an extra 25 pounds a week but then I might not be entitled to working tax credits as I think I will be over the annual amount that I need to be under to claim.

So am I better off not receiving a pay rise so I can stay on working tax credits? This does not seem right to me.

Unfortunately with strict thresholds, you may be better off not taking the pay rise.

It isn't "right" but until we have a taxation system that scales according to pay, we're stuck with what we have.

Horseunderwater

There 2 thresholds for WTC - 1 = £6420 2 = £16010, but there different cutoff points for single/disability/couple no kids/couple with kids/ childcare etc. So for blondbubbles or icequeen to help, they would need your gross income for last year & expected income with rise for this one & your circumstances.

zagfles

You are almost certainly going to be better off taking the payrise. There are no "cutoffs" in tax credits at all (except for passported benefits like free prescriptions etc), I don't know people think there are. The award is tapered on income, not suddenly cut off when you exceed a particular level.

There are rare circumstances where you can be better off earning less but usually when your income is variable, going up and down, due to the way the disregards work. For a normal payrise which is likely to be permanent you won't be worse off.

JonBristol_2

Hi. Last year I was on JSA for the year so received about 3692 for the year. I started the new job on 18/6/14 starting on about 30 hours a week at 6.31 an hour.

Another problem since the last message I sent is that I have not informed the tax credits people that my hours are now 40 hours a week instead of 30 hours that I started working when I claimed working tax credits. Not sure if I should tell them this?

And back to the original question about the pay rise. No one knows exactly what we will be on in a couple of months as there is a dispute over the pay rise but will probably be around 7.50 an hour which is over pound more an hour than what I am on now. That adds up to about 40 quid extra a week and take away tax maybe about 35 take home. My working tax credits is 54 pounds a week. So basically I would imagine they would cancel my tax credits and I will be worse off even though I will get a pay rise. Glad that I might be wrong from what I have read on a reply so far. But I thought you either get tax credits of a minimum of just under 2000 pounds a year, or you don't get it at all?

Indie_Kid

Do you have a partner and are you disabled?

JonBristol_2

No neither.

Housing_Benefit_Officer

JonBristol wrote: »

Hi, I am currently receiving working tax credits as I am on a low income. I receive just over 50 pounds a week. My employer has told me they may give me a pay rise in a couple of months which will result in me earning about an extra 25 pounds a week but then I might not be entitled to working tax credits as I think I will be over the annual amount that I need to be under to claim.

So am I better off not receiving a pay rise so I can stay on working tax credits? This does not seem right to me.

If you deliberately deprive yourself of an income then you are treated as still receiving that income. We always write to people who aren't claiming Working Tax Credits. If they write back and state in writing "I'm not claiming Tax Credits as it will reduce my Housing Benefit" then we treat them as receiving Working Tax Credits as they are deliberately depriving themselves of an income to increase their Housing Benefit. People have appealed against this but their written statement means their appeal fails.

Icequeen99

You need to get some advice and work through the figures.

Your tax credits are only £54 a week because you were on JSA last year. Come next April, even if you don't get a pay rise it is likely your tax credit payments will reduce.

IQ

Caz3121

Agree with IceQueen, even without pay rise your tax credits are likely to be almost wiped out next year so you may be glad of the additional income, eg if you earn £12k this tax year you will be down to under £9 per week WTC
Tell them about your increase this year as, if they have based your award on £6.31 x 30 hours and you are currently working £6.31 x 40 hours this will affect your WTC and you may end up with an overpayment (they will still base it on "income less £5k" but the "income" number will be higher than the one they have used on the award)