Will I be taken off tax credits and when?

nicdigby

Hi,
I am on child tax credits. Have some savings so if I go into UC , I wouldn’t get anything. 

Single parent. I also am quite severely disabled. I receive support group ESA (contributory). Started doing some permitted work during tax year 2022-23 (and told them in advance). I’ve averaged something like 8 hours / £80 per week for this I think.
Two topics of questions:
1) I recall reading that this is the last year of tax credits. Am I correct? If so, what will happen then to my CTC? Will they just stop altogether …or is there some protection? If there is, how long for? Will I eventually get moved to UC and if so, when? 
2) Because I am severely disabled, if I worked more than 16 hours per week the benefits calculator websites all say I’d be significantly better off because there is a disability ‘bonus’ of working tax credits, even though I would lose the ESA. I’d quite like to do just a few more hours per week and earn a bit more because I enjoy it and it’s good for my well-being and mental health to work. But if my CTC or WTC are going to automatically stop next April for example, I suspect I’d be better off staying as I am ….because claiming for ESA was a nightmare and I can’t bear to have to claim for it again ….and also because it gives me enough NI credits each week to go towards my state pension. If I increase my working hours I’ll get WTC but lose the ESA and will (I think) have to start paying some form of NI contributions so that if I ever need to go back onto ESA I have enough NI contributions in the previous tax year to do so. 
So trying to work out what to do. But flummoxed! Can anyone assist? 
Thanks in advance. 

calcotti

I should expect to be informed that your Tax Credits will end and will be advised to claim UC before the end of 2024.

If your capital exceeds £16,000 you are generally excluded from UC but will be permitted to receive UC for 12 months.

Your contribution based ESA is not affected and will continue (and will, as you say, end if you work in excess of Permitted Work rules). 

poppy12345

When you claim UC if you're still in the Support Group for ESA then you'll also be entitled to the LCWRA element of UC from the start of your claim. The ESA will also be deducted in full from any UC entitlement.

nicdigby

calcotti said:

I should expect to be informed that your Tax Credits will end and will be advised to claim UC before the end of 2024.

If your capital exceeds £16,000 you are generally excluded from UC but will be permitted to receive UC for 12 months.

Your contribution based ESA is not affected and will continue (and will, as you say, end if you work in excess of Permitted Work rules). 

So I will be told to claim UC but won’t be eligible due to capital over £16k but I’ll be able to claim it anyway, for 12 months, as if that capital didn’t exist?

poppy12345

nicdigby said:

calcotti said:

I should expect to be informed that your Tax Credits will end and will be advised to claim UC before the end of 2024.

If your capital exceeds £16,000 you are generally excluded from UC but will be permitted to receive UC for 12 months.

Your contribution based ESA is not affected and will continue (and will, as you say, end if you work in excess of Permitted Work rules). 

So I will be told to claim UC but won’t be eligible due to capital over £16k but I’ll be able to claim it anyway, for 12 months, as if that capital didn’t exist?

That's correct.

Spoonie_Turtle

nicdigby said:

If I increase my working hours I’ll get WTC but lose the ESA and will (I think) have to start paying some form of NI contributions so that if I ever need to go back onto ESA I have enough NI contributions in the previous tax year to do so. 

If you are working more than the Permitted Work threshold you will at least be credited with NI contributions, if not actually paying them (depending on your earnings and what the thresholds are).

nicdigby

Spoonie_Turtle said:

nicdigby said:

If I increase my working hours I’ll get WTC but lose the ESA and will (I think) have to start paying some form of NI contributions so that if I ever need to go back onto ESA I have enough NI contributions in the previous tax year to do so. 

If you are working more than the Permitted Work threshold you will at least be credited with NI contributions, if not actually paying them (depending on your earnings and what the thresholds are).

Ah! So if I have low earnings (but am working too many hours for ESA and am on working tax credits instead) I will still get NI contributions that will allow me to re-start on Contribution ESA if my medical situation deteriorates? 

Spoonie_Turtle

nicdigby said:

Spoonie_Turtle said:

nicdigby said:

If I increase my working hours I’ll get WTC but lose the ESA and will (I think) have to start paying some form of NI contributions so that if I ever need to go back onto ESA I have enough NI contributions in the previous tax year to do so. 

If you are working more than the Permitted Work threshold you will at least be credited with NI contributions, if not actually paying them (depending on your earnings and what the thresholds are).

Ah! So if I have low earnings (but am working too many hours for ESA and am on working tax credits instead) I will still get NI contributions that will allow me to re-start on Contribution ESA if my medical situation deteriorates? 

Yes, if you earn over £123 per week https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

nicdigby

Spoonie_Turtle said:

nicdigby said:

Spoonie_Turtle said:

nicdigby said:

If I increase my working hours I’ll get WTC but lose the ESA and will (I think) have to start paying some form of NI contributions so that if I ever need to go back onto ESA I have enough NI contributions in the previous tax year to do so. 

If you are working more than the Permitted Work threshold you will at least be credited with NI contributions, if not actually paying them (depending on your earnings and what the thresholds are).

Ah! So if I have low earnings (but am working too many hours for ESA and am on working tax credits instead) I will still get NI contributions that will allow me to re-start on Contribution ESA if my medical situation deteriorates? 

Yes, if you earn over £123 per week https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

Thank you. What if I work over 16 hours per week but don’t average over £123 per week? (Self employed).  How would I ensure I gain enough NI contributions to go back on ESA if my health deteriorated? Also is there any upper limit that I can earn before I start paying NI contributions myself? 

Spoonie_Turtle

The link has tables for self-employed NI thresholds.  I don't know how it works with working hours vs earnings for Permitted Work or NI.

calcotti

nicdigby said:

Spoonie_Turtle said:

nicdigby said:

Spoonie_Turtle said:

nicdigby said:

If I increase my working hours I’ll get WTC but lose the ESA and will (I think) have to start paying some form of NI contributions so that if I ever need to go back onto ESA I have enough NI contributions in the previous tax year to do so. 

If you are working more than the Permitted Work threshold you will at least be credited with NI contributions, if not actually paying them (depending on your earnings and what the thresholds are).

Ah! So if I have low earnings (but am working too many hours for ESA and am on working tax credits instead) I will still get NI contributions that will allow me to re-start on Contribution ESA if my medical situation deteriorates? 

Yes, if you earn over £123 per week https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

Thank you. What if I work over 16 hours per week but don’t average over £123 per week? (Self employed).  How would I ensure I gain enough NI contributions to go back on ESA if my health deteriorated? Also is there any upper limit that I can earn before I start paying NI contributions myself? 

If self employed the £123 earnings rule is not applicable, that applies for the employed. As self employed you could pay voluntary self employed Class 2 NI contributions (which are very cheap).