Benefit cuts timetable

Icequeen99

zagfles wrote: »

See my post above. According to Guardian calculator this is unchanged. But both IQ and I think this is wrong, and it'll be £12125.

See post #48 here https://forums.moneysavingexpert.com/discussion/5282993

It would need a significant legislation change because the two regulations that deal with calculating WTC and CTC would need to be changed otherwise it just won't work if they keep the figure at 16k.

People seem to be presuming (including the media) that because it hasn't been announced it isn't changing. Although they set the threshold for CTC as one of the rates - it is calculated as you say in a very specific way which is why it fell in 2011/12.

The Guardian probably need to do their homework a bit more!

IQ

sorryitsme

Hi I am looking for a bit of help in calculating the reduction to my award.


I currently work 30 hrs per week
I pay £70 per week in childcare

I am single and have 3 children
my annual salary (15-16) is £18,800 last year (14-15) £17905 ( both amounts less pension contributions)




Thanks in advance.

zagfles

Icequeen99 wrote: »

It would need a significant legislation change because the two regulations that deal with calculating WTC and CTC would need to be changed otherwise it just won't work if they keep the figure at 16k.

People seem to be presuming (including the media) that because it hasn't been announced it isn't changing. Although they set the threshold for CTC as one of the rates - it is calculated as you say in a very specific way which is why it fell in 2011/12.

The Guardian probably need to do their homework a bit more!

IQ

I've just had a look at the legislation http://www.legislation.gov.uk/uksi/2002/2008/regulation/8/made

The threshold for the relevant period is—
(a)in the case of a person or persons entitled to child tax credit only, that amount;
(b)in the case of a person or persons entitled to both child tax credit and working tax credit—
(i)that amount; or
(ii)if greater, the lowest amount of income for the relevant period (found under Step 3) which, disregarding regulation 9, would result in a determination in accordance with regulation 7 providing for no rate of working tax credit in his or their case for that period.

Which I think is saying, for those entitled to WTC & CTC, use the greater of the CTC only threshold and the point at which WTC tapers to zero.

So if the CTC threshold were greater than the point at which WTC tapers to zero, it should work, there'd be a "plateau" of a few thousand at which WTC would be zero but no reduction in CTC!

I just mentioned in another thread that the CTC only threshold appears to be set annually by SI rather than being calculated by legislation.

Whatever the truth of this - it's a massive omission from the budget document, they should have said one way or another.

Icequeen99

zagfles wrote: »

I've just had a look at the legislation http://www.legislation.gov.uk/uksi/2002/2008/regulation/8/made
Which I think is saying, for those entitled to WTC & CTC, use the greater of the CTC only threshold and the point at which WTC tapers to zero.

So if the CTC threshold were greater than the point at which WTC tapers to zero, it should work, there'd be a "plateau" of a few thousand at which WTC would be zero but no reduction in CTC!

I just mentioned in another thread that the CTC only threshold appears to be set annually by SI rather than being calculated by legislation.

Whatever the truth of this - it's a massive omission from the budget document, they should have said one way or another.

It is set annually by SI - but the method HMRC have used to calculate it every year since tax credits began is using the formula:

WTC basic + WTC couple x 100/taper% + WTC threshold.

If you look at the CTC threshold here http://www.revenuebenefits.org.uk/pdf/Tax%20_Credit_Annual_Rates_April%20_15.pdf you can see how it has changed, and you can see that it fell in 2011 for the same reasons - the freeze coupled with a changed in the taper percentage.

It would have been helpful for them to announce it, but if there isn't any change then there would be no need to.

IQ

zagfles

Icequeen99 wrote: »

It is set annually by SI - but the method HMRC have used to calculate it every year since tax credits began is using the formula:

WTC basic + WTC couple x 100/taper% + WTC threshold.

If you look at the CTC threshold here http://www.revenuebenefits.org.uk/pdf/Tax%20_Credit_Annual_Rates_April%20_15.pdf you can see how it has changed, and you can see that it fell in 2011 for the same reasons - the freeze coupled with a changed in the taper percentage.

It would have been helpful for them to announce it, but if there isn't any change then there would be no need to.

IQ

Well I've tried 4 calculators and they all seem to be wrong!

The Guardian and BBC are assuming the CTC only threshold stays at 16105 for both CTC only and CTC & WTC claimants.

The Telegraph and Independent assume that if you're on CTC only you keep the 16105 threshold, but if you're eligible for WTC the whole lot is tapered from 3850! Which is obviously wrong - a single parent working 15 hours for £16000 would get CTC in full according to them but if they work 16 hours for the same salary they'd get £1904 less!! There is no way this can be right!!

Icequeen99

zagfles wrote: »

Well I've tried 4 calculators and they all seem to be wrong!

The Guardian and BBC are assuming the CTC only threshold stays at 16105 for both CTC only and CTC & WTC claimants.

The Telegraph and Independent assume that if you're on CTC only you keep the 16105 threshold, but if you're eligible for WTC the whole lot is tapered from 3850! Which is obviously wrong - a single parent working 15 hours for £16000 would get CTC in full according to them but if they work 16 hours for the same salary they'd get £1904 less!! There is no way this can be right!!

They're all wrong. There are few people who actually understand tax credits and the proper calculation.

Using the WTC threshold of WTC/CTC is just an easy way of explaining it.

Technically you are supposed to use the WTC threshold to reduce the WTC elements. Then you use either the CTC threshold or, if greater, a threshold equal to the point all WTC elements taper to reduce CTC.

I will just wait until I can do my 'i was right' dance.

IQ

rogerblack

Icequeen99 wrote: »

I will just wait until I can do my 'i was right' dance.

IQ

I bet it's not as hot as IDSs.

https://www.youtube.com/watch?feature=player_detailpage&v=Ha0D6CVZ11s#t=27

What a charming man.

zagfles

Icequeen99 wrote: »

They're all wrong. There are few people who actually understand tax credits and the proper calculation.

Using the WTC threshold of WTC/CTC is just an easy way of explaining it.

Technically you are supposed to use the WTC threshold to reduce the WTC elements. Then you use either the CTC threshold or, if greater, a threshold equal to the point all WTC elements taper to reduce CTC.

Yes, that's what the legislation says as above, but assuming you're right and the CTC only threshold is still going to be set at the point at which the WTC basic & couple elements taper to zero, then using the WTC threshold for those eligible for both will always give the right answer.

Since those eligible for both must be eligible for the basic & couple/lp element and so the point at which WTC tapers to zero will always be equal to or greater than the CTC threshold.

It can only give the wrong answer if you're wrong

I will just wait until I can do my 'i was right' dance.

IQ

I can't wait - will you post it on youtube

Seriously - I agree you're almost certainly right - but 4 major news organisations including the BBC have got it wrong and will be giving people massively incorrect results. I hope one of the tax charities is telling them...

zagfles

rogerblack wrote: »

I bet it's not as hot as IDSs.

https://www.youtube.com/watch?feature=player_detailpage&v=Ha0D6CVZ11s#t=27

What a charming man.

I suspect IDS didn't like the increased taper in tax credits as it'll reduce incentives to work, so he was pleased with the increased NMW/NLW as it makes up for it a bit.

Icequeen99

zagfles wrote: »

Yes, that's what the legislation says as above, but assuming you're right and the CTC only threshold is still going to be set at the point at which the WTC basic & couple elements taper to zero, then using the WTC threshold for those eligible for both will always give the right answer.

Since those eligible for both must be eligible for the basic & couple/lp element and so the point at which WTC tapers to zero will always be equal to or greater than the CTC threshold.

It can only give the wrong answer if you're wrong
I can't wait - will you post it on youtube

Seriously - I agree you're almost certainly right - but 4 major news organisations including the BBC have got it wrong and will be giving people massively incorrect results. I hope one of the tax charities is telling them...

Two of them are powered by the same base calculator (BBC and Guardian) I haven't checked the others which is probably why they have it wrong.

IQ