Turning down wage increase to maintain benefits

Housing_Benefit_Officer

The bigger problem with people turning down pay rises and only working low pay jobs is employers keeping wages low as they know they will always have people who are happy being paid peanuts. An employer has no incentive increasing the wages for his workforce knowing people are happy enough to plod along on the Minimum Wage. If people didn't take low paid jobs then employers would be forced to increase wages to attract workers - although havng a constant flow of cheap foreign labour willing to work, in some cases below Minimum Wage or cash in hand, also decreases wages.

ab1982

Works same way with tax, some workers cant do OT as it takes certain benefits in kind like company cars inti higher tax bracket doubling the cost.

jjj1980

The last pay rise I was given, I cannot remember the actual figures but my wage rose by approximately £50 per week, after Tax and NI but my total Tax Crddits and Housing Benefit dropped by around £55 a week, so I ended up £20 per month worse off!

[Deleted User]

Housing_Benefit_Officer wrote: »

The bigger problem with people turning down pay rises and only working low pay jobs is employers keeping wages low as they know they will always have people who are happy being paid peanuts. An employer has no incentive increasing the wages for his workforce knowing people are happy enough to plod along on the Minimum Wage. If people didn't take low paid jobs then employers would be forced to increase wages to attract workers

Easy to say.

One of my lowest paid jobs lasted 5 years. Really thought I'd never go as low as that wage again of £12,800 but yep I've managed to

Highest paid 3 months before I got the soul destroying 'you're redundant' chat before the JSA queue. I commuted 50 miles there and back to pick up this higher wage. Employers of today just wouldn't consider me doing something like it whether it's others that moan about commuting or it really is a duty of care issue... thus I now earn £12,740 so I'm guessing it may be for the best if I were to be made redundant once again if the business doesn't take off... not that I look forward to it by any stretch of the imagination

zagfles

jjj1980 wrote: »

The last pay rise I was given, I cannot remember the actual figures but my wage rose by approximately £50 per week, after Tax and NI but my total Tax Crddits and Housing Benefit dropped by around £55 a week, so I ended up £20 per month worse off!

Then there was some other change as well which affected your payments. A payrise alone cannot make you worse off just through net pay, tax credits and housing benefit. The tapers don't work like that.

Changes can take 1-2 years to feed through to tax credits due to the disregard and annual assessment. Or you were late notifying so they backdated the changes.

It's vague anecdotes like this which make people think they'll be worse off with a payrise. They hardly ever are, there are a few rare exceptions as described above.

JimmyTheWig

zagfles wrote: »

The problem is most people don't understand how benefits and tax credits are calculated. They assume they'll be worse off because they make the same sort of mistake as above, eg add the tax credits taper (41%) to tax & NI (32%), which is right, but then they add the HB taper (65%) and possibly CTB taper (usually 20%) and it looks like they have a taper rate of 158% !! But they haven't. The HB/CTB tapers apply to net pay, so you can't just add them.

Reasonable for the workers to be uninformed.
But not reasonable for the employer, who is an MP, to be uninformed.
Not reasonable if he brings this example up in the house for it to not be contradicted in the same ways that it has been in this thread.

It's almost as though they want this mis-information to go out.