Working Tax Credits: A Black Art??? [Some Helpful Figures]

[Seraphim]

I just phoned up and asked how they calculate the amount of tax credits a person receives...

The lady I spoke to told me what was paid for what element... so I asked if that's added up and divided by 52 essentially?

She said no.

I said, so those figures you just gave me don't reflect really on what you receive?

She said no.

I said, well I just want to know how much to expect.

She said 'It's tapered.'

I asked what that meant. She said 'On how much you earn'

Right ok. Tapered how?

'We're not trained on that'

I won't bore you will the full dialogue, but next I went on to ask about how they deal with my drop in pay whilst I'm on mat leave (spanning this tax year and next) She said, just phone them and tell them how much I think I'll earn.

Given that these are the people who are very good at taking the Tax OUT... it's funny how much guesswork and hokeypokey seems to go in to deciding what they pay back IN.

I also asked how it changes once we have the baby. Apparently I just 'ring up' again.

Which is all very convenient, but no sodding use at all while I'm trying to account for what money to expect!!

She says there's all the info on the website.
Which I've READ. Dumbass.
It still never gives any reflection of the little rules they pull out on you once the thing is in motion.

I found a few little things since which shed a little more light on it.

This Page on WTC and CTC explains the thresholds and 'tapering'

It seems you can earn £6,420 then for every £1 you earn above that, they deduct 39p off your WTC award. That's up until your (joint) income reaches £50k, on which they deduct a further 6.67p (so, 45.67p) for every £1 earnt above £50k

The other interesting thing I found is the amount you can earn against CTC - which is really helpful if your joint income, or just your OH's income hovers around the £16k mark. It might help you make a decision on whether to stay at home with the kids or not.

Up to £16,040 Joint Income
1 Child: £2,780
2 Children: £5,615
3 Children: £7,250

Up to £50,000 Joint Income
1-3 Children: £545

It seems like if you've got kids, you really don't want to earn a joint income of £51k. Guess that's one good way to keep womens career prospects in check... make it pointless for them to go out and earn an average-to-good wage.

 

[sparkswillfly]

yep. Its pointless both me and my partner working at the same time. we would be worse off after paying for childcare.

Its a flawed system it seems to punish people with average incomes.

 

[Abz1982]

Its stupid, that if you earn 16040 you get £2,780, but if you earned just say £60 more you would get £545!!

 

[Seraphim]

Its stupid, that if you earn 16040 you get £2,780, but if you earned just say £60 more you would get £545!!

Especially if you've got more than one child!!

 

[faille]

How they can justify giving the same amount of money for £16061 - 50000 is beyond me and the HUGE gap between the two amounts.

It should be % based in my opinion. Just because a couple has a good joint income doesn't mean they can "afford" kids any more than those on low incomes... everyone lives to their means and why shouldn't they? And no, me & my OH have a pretty poor income but not low enough to be entitled to sod all. Doesn't stop me thinking people on better wages deserve just as much help as us though.

It should be % based and then everyone is helped the same amount.

 

[Seraphim]

I think it's set out to be the biggest help to those on lower incomes - which I agree with.
People on higher incomes have more opportunity to save and plan etc.
Although I know what you mean about living to your means.

The thing that shocks me is that it appears to cut you dead in the water as soon as you get to 'modestly ok' / stable.

And overrall I just think it puts pressure on women particularly to make huge consessions in their overall earning capacity across the length of any career.

 

[vicky82]

Also it really annoys me that they dont look at Exspenditure, such as Mortgage payments, management fees etc.
My husband and I income on paper looks great but when you take out all payments and childcare we are left with hardley anything

 

[LucyS]

SO am I worse off earning 18k this year? I didnt think ctc worked on your earnings only wtc?

 

[Seraphim]

SO am I worse off earning 18k this year? I didnt think ctc worked on your earnings only wtc?

CTC works on Joint Income.

So if it's just your income, or just an income of £18k... then based on my non-specialist sums...

CTC for 1 child:

Work out the extra for being below the lower threashold
£2,780 (CTC on lower threshold) - £545 (CTC on higher threshold) = £2,235 (amount extra on lower threshold)

£16,040 (amount you can earn on lower threshold) + £2,235 (CTC for lower threshold = £18,275

Please don't make any decisions based soley on what I've worked out... check it out with HMRC yourself, but hopefully it's helped draw your attention to why it's worth looking into.

 

[LucyS]

it confuses me so much! thinking id be better off earning about 14k a year?

 

[Seraphim]

it confuses me so much! thinking id be better off earning about 14k a year?

Its depends how many children you have and if yours is the only income. Which you haven't said - but you can work it out as I did above, and then check with HMRC

 

[LucyS]

1 child and on my own.

Its mad as I was on maternity allowance last year so getting lots oof tax credits this year but next year it will go RIGHT down!

It is right that even tho I was on maternity allowance last year I still say I was working full time as technically I was employed right? x

 

[mrskx0x0]

It also seems to discriminate against ex full time employees. I was looking at the website with the calculator and my friend (her husband earns more than mine and she works half as many hours as me presently) she is entitled to an extra £30 a week to me even if we go back to work doing 16 hours each. How is that fair and how do they work that out?

 

[Seraphim]

It's based on different elements. These can be very different from one person to the next.

 

[lindypops]

Its stupid, that if you earn 16040 you get £2,780, but if you earned just say £60 more you would get £545!!

Especially if you've got more than one child!!

and especially if you only earn £17000...

 

[LucyS]

Does it go down again at 17?

 

[Seraphim]

Does it go down again at 17?

CTC goes down after £16040 (as described above)

 

[Kirstin]

This is hypothetical but I am interested as if this is the case the system is screwed - if you earn say £8000 you get £2780 if you get 16040 you still get 2780 but if you get 16041 you only get 545?

 

[LucyS]

I done a estimate on entitled to and even though ill be earning say 17.5 k this year it said id get roughly £30 a week ctc.

 

[lauraperrysan]

Hey visit this website, it will give you the break down of what you are entilted to. Tax credits are confusing but and you can't really plan for def what you will get but this website is really quite accurate give or take a few £'s
www.entitledto.co.uk

Hope this helps xxx