WTC/CTC clarification

ps_live

Hi guys, I have read this forum with interest for the last few days, trying to glean the information to gauge our personal circumstances.

Anyway, our Tax Credits update forms have plopped through the post this morning, so I thought I'd work out what we are entitled to for 2005/2006.

Unfortunately, I have got two different figures. Using the online calculators:

inland revenue/tax credits = £483

entitledto = £547.50

These figures both seem low. They are based on my sole income of just under 27k gross for last year. My wife does not work, I have two children (6 and 3), no disabilities, no benefits. Why the difference in figures?

Last year, we were paid £67/month. This figure rose, by itself, last month to £74/month. When I return my completed forms, I have a feeling I'll be re-adjusted to £45ish/month minus any overpayment for last year.

So, to clarify in my mind ...
* We are not entitled to WTC as I earn too much.
* The CTC "family element" is £547.50 ... and thats all we are entitled to.

If this is the case, the families who earn 50k+ gross, do they still get the £547.50?

I feel as though we are in no-mans land when it comes to Tax Credits. At £40-45/month it'll hardly feel as though we are getting any benefit at all (considering I'm earning significantly less than the 50k+ that still entitles families to claim).

Alternately, after all this has been said, am I being unreasonable and should just shut up? After all, any money is better than no money.

I'd be interested to hear anybodys opinions on my situation.

kind regards :beer:

Pete

Spendless

Hi

You are getting 2 different figures as one calculator works from beginning of tax year till end of tax year (ie april-april) the other works from todays date till end of tax year.

But you are correct on your salary you are entitled to the family element of child tax credits (the £547.50 pa).It works out at roughly £10 a week.

This amount assumes you have no childcare costs, no disabilities in family and children are all over one.

Have you had a salary increase recently? Was this your reason for getting more than the family element last year?

You bring up a subject I have mentioned before, you could get a £20,000 pay rise and still get the same figure. Likewise you could have a £47,000 salary reduced to £27,000 and still receive the same.The figure doesn't always change when you have more children. We have to add my husbands company car on as income also. I once messed around and found I'd have to have 5 or 6 children before the amount changed!

If your wife was to work 16 hours or more you might get some help with childcare costs. It would depend on how much childcare was.

Does your 3 year old attend playgroup/pre-school/private nursery. There is funding the term after their 3rd birthday that is non-means tested. Also if your employer offers the childcare vouchers you can salary sacrifice upto £50 a week in return for childcare vouchers, and the money you sacrifice is exempt from tax and NI.

These don't add any more money to your salary but might reduce your costs depending on whether or not your children attend anywhere.


edit- to answer your question. CTCc starts to tail off around the £50,000 mark, except if a child is under one when it is a higher amount (around £60,000 but not sure of figures). I'm not sure at which amount it ends

ps_live

Spendless wrote:

Have you had a salary increase recently? Was this your reason for getting more than the family element last year?

Yes, I have been at my current place of work for almost two years. I started on 19.5k with a view to moving to 21k+overtime after six months (Dec 2003). In Jan 2005, it went to 25k+overtime.

You bring up a subject I have mentioned before, you could get a £20,000 pay rise and still get the same figure. Likewise you could have a £47,000 salary reduced to £27,000 and still receive the same.

Indeed, it seems a little unfair here.

Does your 3 year old attend playgroup/pre-school/private nursery. There is funding the term after their 3rd birthday that is non-means tested.

About to start playgroup actually, though I think its buttons per morning session (I'll check this though).

When we decided to have children, we made the conscious decision that my wife would give up work and look after the kids until they both hit full-time school. As such, we have no child-care costs at all. Unfortunately this decision, it seems to us, means the government give us no help whatsoever in additional benefits. Still, the "wee one" will be in full-time school in a little over a years time, then my wife can finally start working again.

Thanks for the response.

kind regards :beer:

Pete

loobyloo1980

I'm in exactly the same boat Pete, if I go back to work my son would have to be in full time childcare of £100 per week just to be able to work 16-20 hours, which would pay little more than that. According to entitledto would not get help with childcare as salaries would be too high to qualify for any help. I would be paying to go to work - and it is wrong. Sometimes you just cannot win if you are a working couple on a modest income.

I'm worried about going to work when my son starts school as it will cost to have both the kids looked after in holidays then - and this also makes things hard.

Savvy_Sue

ps_live wrote:

I feel as though we are in no-mans land when it comes to Tax Credits. At £40-45/month it'll hardly feel as though we are getting any benefit at all (considering I'm earning significantly less than the 50k+ that still entitles families to claim).

Well it covers our monthly car insurance premiums, so I'm not knocking it! And yes, I would miss it if we weren't getting it.

jellyhead

there are a few niggles with tax credits once you earn around 24 yes ... my hubby earns somewhere between 25 and 25. my son is 8 and we're just about to have a baby so i had a look to see if the tax credits go up. there's an extra amount for when the baby is under a year old, but aside from that there's no change but if we had 3 children we'd get more than double the amount for having one child - who decided that you need 1100-ish for 3 kids, 550-ish for one kid but only 550-ish for two kids? why can't i have an amount that's somewhere in the middle of those two figues for having two children?

i have a part time job in school hours only earning 2 thousand a year and today was my last day at work so i had another look at what tax credits we could get based on hubby's income alone - if he earned a few pounds less i'd get a £500 sure start maternity grant to buy things for the baby, as it is we can't get anything. a sliding scale would be nice, so if say we earn fifty pounds above the cutoff limit we can have the grant but minus fifty.

also, a couple where both parents earned 12,500 would have the same joint income as a couple where one earned 25 and the other didn't work but the first couple would bring home more money because they get tax and ni allowances for both of them, netting around an extra thousand tax free i think.

company cars are another niggle - we get taxed on ours, we pay slightly more in extra tax than we were paying before for our trusty rust bucket (including rescue, insurance, tax, monthly amount set aside for repairs and servicing etc.) yet when tax credits work out our income they add on the benefit-in-kind, so even though we're taxed on it already and bring home less money the tax credits people add it on again for a second time, then say that our income is more than it is (taking us over the threshold for getting child element - grrr!).

if hubby earned around 26/27 none of these things would probably bother me, but we're just on the cusp of getting extra help so i do get upset sometimes that there are these little niggly things that i think are unfair - pregnancy hormones lol!!

but yes, as has been said i'm grateful for the tenner a week we get, it helps and we'd certainly miss it if we didn't get it (although we got it before tax credits, hubbys wages were a tenner a week higher because of the changed tax code for having sprogs). it helped when i was paying childcare myself (because son wanted to try the after school club). i shouldn't grumble because an income of 24+ does mean we're not exactly poor, but still ... grumble grumble whinge whine etc. etc!!

i might look at those figures again for the £500 baby grant thing actually - if i give hubbys extra £50 a year to oxfam through gift aid does that mean we go below the limit? :rotfl:

irs101

who decided that you need 1100-ish for 3 kids, 550-ish for one kid but only 550-ish for two kids? why can't i have an amount that's somewhere in the middle of those two figues for having two children?

But that's just a function of your personal circumstances. If you had an income of around the £20,000 mark you would get over £1,600 for each additional child. And if you were on an income of £32K-ish you would get nothing for the third kid.

The government have got themselves into a situation where they look they've created an unfair system because they have rolled the MCA/ChTC into CTC (although made it a bit fairer by taking it away from those over £50K). Whereas in fact it's a lot more generous than it was previously. Everyone on £20K or less is much better off and only those on the highest (joint) incomes are worse off (and only marginally so).

irs

ps_live

irs101 wrote:

The government have got themselves into a situation where they look they've created an unfair system because they have rolled the MCA/ChTC into CTC (although made it a bit fairer by taking it away from those over £50K). Whereas in fact it's a lot more generous than it was previously. Everyone on £20K or less is much better off and only those on the highest (joint) incomes are worse off (and only marginally so).

I totally take your point on this irs101. Like I stated in the OP, some money is better than no money. Its not that I'm not ungrateful, just that a family who potentially earns 23k more than myself, receives exactly the same benefit. I don't think thats fair.

In relation to the above quote, my 27k gross/annum is still a LOT closer to the 20k taper than to the 50k+ exclusion.

kind regards :beer:

Pete

jellyhead

irs i agree, i know i'm just being greedy and moaning ... i'd just like there to be points at which the amounts taper pound for pound rather than definite cutoffs, pensioners used to argue the same way about the extra heating allowance when i worked for age concern 9 years ago, they were upset that because they had a few pennies more than the level for income support they got nothing, they wanted it to be tapered so they got the full amount minus the amount that they were over by, and that's what my gripe was, but i do see that on an income of 24 we shouldn't expect to be entitled to anything and that we're not poor, just greedy. i just feel skint because baby's on the way and i haven't bought everything yet, and if the system was a little bit different i'd get more money, i agree it would only help people within a narrow income bracket of around 24/25 though and it would probably take more time to administer. i just felt like moaning yesterday

irs101

I think the issue isn't so much any sort of cut-off, but the fact that you've got this funny two-part taper with a very long plateau in the middle. So instead of tapering to zero straight away, it tapers down to £545, hangs around on that plateau for a while, then tapers again. So someone can earn a certain amount and get, say, £600 while someone else on £10K more can still get £545. Now a seasoned tax credit veteran knows that this is just because the government has tried to preserve what the higher paid person previously got with the MCA. But to someone unfamiliar with the policy background, it looks very unfair.

Personally, if I were designing the policy from scratch (and assuming I had the same amount of money to spend) I would reduce the gradient of the taper, say to 25%, and taper it straight down to zero, getting rid of the family element plateau. That would mean any family with 1 child earning more than £30K or so would get nothing. Much fairer, even more money going to those on incomes less than £25K but politically unpalatable.

irs

Spendless

I agree it's the family element plateau that makes a lot of people see it as unfair, but I've got another question to ask irs-one I've wanted to ask for ages.
Why aren't maintainance payments taken into account for tax credit purposes.

A single mum friend of mine is receiving over £100 a week in maintainance. By the time you add on her wages, tax credits etc. She receives a similar income to my own net income,but receives things like free perscriptions,help with childcare which we don't.

Also she is in receipt of the same amount of tax credits as someone else with same amount of children, earning exactly same money who doesn't receive maintainance.