Will HB use net or gross pay rise

Scoobs2006

Hi,

Im getting a pay rise at work through promotion.
My income currently is £12,250 per annum part time 24hours, my new income will be £16,000 32 hours a week so a little over the 2500 income disregard on tax credits
My question is this will housing benefit/tax credit use gross or net per annum? If they use net pay figure i should qualify for the 2500 income disregard? I just concerned i will be worse off.

w06

Presume you realise but you're actually taking a pay cut, very crudely 12250/(52*24) = £9.82/hour and £16000/(32*52) = £9.62/hour

calcotti

Housing benefit uses net income. Tax credits use gross income. If your tax credits change that will also need to be reported to you local authority and will affect your Housing Benefit.

For Tax credits if your income has gone up by less than £2,500 then income from last year will be used. If income has gone up by more than £2,500 then income for this year will be used minus £2,500. But this is based on income for the tax year not the annual rate of pay so you shouldn't compare the new and old salaries you need to look at the tax year.

So i think it works like this:
Assuming figures you have quoted are gross salary, you have had 5 months at lower level and will have 7 at increased rate and that last year your income was the same lower rate the calculation would be:

Income last year = £12,250

Income this year = £12,250/12 x 5 is £5,104 plus £16,000/12 x 7 is £9,333.33. Total is £14,437.33.

This is less than last year plus £2,500 so income from last year will still be used to calculate Tax Credits for this year. Obviously at next renewal you should anticipate Tax Credits going down as a result of your increased income.

You'll have to work this through using the actual figures and time periods known to you.

Scoobs2006

This i know. I should of explained my situation better, its a new job role in a different department however the extra responsibilty will take me onto bigger & better opportunities, i suppose you could say its an apprentice position wage in a potentially higher earning part of the business. Foot in door so to speak in my eyes a promotion onto better things.
I dont suppose you could answer my orginal question can you?

Scoobs2006

Ok thanks calotti. I will of course inform housing benefit & vice versa. Its my overall entitlement/money coming in that concerns me As i private rent its obviously a massive chunk of my wages.

poppy12345

Pop your details into a benefits calculator, if details are entered correctly they can be quite accurate.
https://www.entitledto.co.uk/

Scoobs2006

So will i tell HB my net income then & tax credits my gross or both my gross?

calcotti

Scoobs2006 wrote: »

So will i tell HB my net income then & tax credits my gross or both my gross?

Tell Tax Credits your gross salary and confirm to them when the change takes place.
Local authority will want to know net income - I would expect them to want to see your payslips to confirm this. If your income changes at all from month to month you should keep them informed.

Scoobs2006

Thanks for your advise. Much apperciated

Afraid_of_Kittens

HB use the gross figure minus tax, ni contributions and 50% of any pension contributions. Payments to unions, employer share schemes, deductions for court orders or maintenance, child care vouchers are added back on.

Alice_Holt

When you notify Tax Credits and the HB dept (and provide payslips for HB), do keep the confirmation slips / note of date / time / person informed, etc. It's sometimes helpful to have proof that you notified the change of circumstances, if things go awry at their end.

When you get the new HB calculation letter - check the correct info has been used. HB will need to know your Gross pay not just the net. Are you increasing your pension contributions?