Can someone simplify the budget changes for tax credits

georgiasdragons

How will the announcements yesterday effect people for tax credit purposes.

How will it effect single parent families with two children, working more than 30 hours on £15,000 paying childcare.

How will it effect a family on £27000 both working one 22 hours one 40 hours with one child paying £400 a month childcare.

A family with one working 40 hours a week £21000 one child and one stay at home parent?

Thanks in advance just having a debate in the office and none of us understand!

georgiasdragons

Only the lowest-income families will be able to claim tax credits. Together with changes to entitlement to Universal Credit, this will cut £2.9bn from the welfare bill in the next financial year and £3.4bn a year by 2020-21.
For example, the income threshold for tax credits is to be reduced from £6,420 to £3,850.
Larger families, particularly, will be hit by tax credit changes if they have children from April 2017.
Claimants will see child tax credits and Universal Credit limited to the first two children.
Here is some context: at present about 870,000 families claiming tax credits have three or more children - about one in five families receiving tax credit. However, it will only be those larger families making a claim, or having more children, from April 2017 that will be affected.

What does the income threshold change mean, For example, the income threshold for tax credits is to be reduced from £6,420 to £3,850. Does that mean less tax credits for everyone?

pcman1985

How will it effect single parent families with two children, working more than 30 hours on £15,000 paying childcare.

About £26 a week worse off

How will it effect a family on £27000 both working one 22 hours one 40 hours with one child paying £400 a month childcare.

About £51 a week worse off

A family with one working 40 hours a week £21000 one child and one stay at home parent?

About £40 a week worse off

georgiasdragons

thanks, so basically everyone is going to be worse off!
How can this be if people already struggling to cope finacially.

How have you found this info out?

Derwent

georgiasdragons wrote: »

thanks, so basically everyone is going to be worse off!
How can this be if people already struggling to cope finacially.

How have you found this info out?

Not necessarily. They may have less income but will have less outgoings.


One of the things people seem to be missing from yesterday's budget was the increase in free childcare from 15 hours a week to 30 hours a week. So although some families may lose some tax credit income they will also not be paying for 15 hours of childcare which they currently do.

georgiasdragons

The free childcare is only for age 3-4 year olds, it will have no benefit on the parents that have to put children into clubs for 15 weeks a year!

I wont have less outgoings probably have more with costs of living going up.
ill have less incomings!

Casual_Bystander

How about single parent, not working, any change to people on CTC only, i.e has the £16105 earnings threshold changed? I get carers allowance and rental income, just wondering if i will be affected?
Thanks
Cas

kerryallc71

yes it to has been lowered to £12,125.00 .

Pedent

How have you worked out those numbers?

My understanding is that the increase in the taper rate from 41% to 48% means that claimants will lose 7% of earnings over £6420. As the reduction in the earnings threshold from £6420 to £3850 means that an additional £2570 of their income will be used to taper away their award at the new 48% rate, they'll also lose a further £1234 (assuming that they earn over £6420).

If that's right, then a single parent family with two children, working 30 hours+ on £15,000 paying childcare will be £1835 worse off (£35/week):

((£15000 - £6420) * 0.07) + ((£6420 - £3850) * 0.48) = £1835

Why do I get a different figure to you?

georgiasdragons

I thought the income threshold would have an effect on it.

So meaning i already struggle will struggle even more next year!

sunshine1980

Hi not sure if anyone can help. I am a single mum of a 4 year old, earning £10450pa. I went on one of the calculators and it said I would be £1500 a year worse off. However as I claim some housing benefit I had read that HB will go up to cover roughly 60% of the loss of WTC. So I would be around £50 per month worse off. Is this right?


However I have read the following in the Independent:


"From April 2016 the level at which a household's tax credits are withdrawn for every extra pound earned will be reduced from £6420 to £3850. For Universal Credit which is replacing six working life benefits including tax credits, the figures will be £4764 for those without housing costs and £2304 for those with housing costs".


So I will be even more worse off when put on UC? If so can anyone work out how by how much? I have worked out I will be an extra £742 worse off when on UC so altogether £2242 worse off a year?


I'm not moaning about the cuts I am just trying to work out my finances that's all and just dealing with it.


Thanks in advance for any help