Tax credits reduce incentive to work more?

(127 Posts)
11stone4 Thu 07-Feb-13 17:11:51

My best friend Has found this to be the case. The more hours she works the less tax credits she gets. So what's the point exactly to work longer hours to get working and child tax credits to be reduced. I'm a SAHM FWIW

Lovelygoldboots Thu 07-Feb-13 17:13:48

Do you get tax credits out of interest?

expatinscotland Thu 07-Feb-13 17:13:53

Another one! The DM readers will along shortly.

I think we should just open workhouses and stop beating around the bush.

usualsuspect Thu 07-Feb-13 17:15:20

Waits.....

HollyBerryBush Thu 07-Feb-13 17:16:43

Well i think its a peculiar sstem - nut run with me on this!

to simplify, as I understand it, you get tax credits in a low paid job? So effectively you pay tax, then they give you some of it back in these credits? have I got that right?

Well why not raise the personal allowance and stop collecting the tax? would save millions on employing people taking it in, counting it, sending it to another depatrment to be sent out again.

I'm going for Chancellor - anyone with me on this?

11stone4 Thu 07-Feb-13 17:17:07

No I don't receive tax credits. My BF has been offered more hours at work but has refused to take them as she said it would reduce the amount she gets in tax credits.

ouryve Thu 07-Feb-13 17:17:24

Tax credits aren't reduced at the same rate as net pay increases. Leaving childcare, housing benefit etc out of the equation (because they're the things that can scupper plans for people with families wanting to increase hours), someone who starts earning more will always be better off.

Lovelygoldboots Thu 07-Feb-13 17:18:28

I have just got a job as a lunchtime assistant. I find it keeps my hours really low and my tax credits really high. I love milking the tax payer.

usualsuspect Thu 07-Feb-13 17:19:52

I might give up work altogether just to piss a few more taxpayers off, not the OP though as she doesn't work.

Skittish Thu 07-Feb-13 17:20:04

Your friend's a twit then.

When UC comes in she'll have to work more hours or lose her TC.

gordyslovesheep Thu 07-Feb-13 17:22:45

as a scum bag single parent (with flat screen goat) I work more hours ...I pay more in childcare ergo my tax credits GO UP see ...<considers joining Usual in ben ee fits innit>

11stone4 Thu 07-Feb-13 17:23:42

Lovelygoldboots, are you being serious or do I hint some sarcasm ?

LST Thu 07-Feb-13 17:25:01

I receive tax credits and if dp worked less hours we would be better off. Fact.

And I don't read the daily mail.

MrsVJDay Thu 07-Feb-13 17:25:47

Ignoring all the emotive crap above, I also would prefer a much higher personal tax allowance than all the nonsense of giving with one hand and taking back with the other - must be hugely expensive administratively.

HollyBerryBush Thu 07-Feb-13 17:26:10

No one think my idea is pure genius? I think its brilliant!

but Im sure someone will point outa flaw in it

gordyslovesheep Thu 07-Feb-13 17:26:42

No she is deadly serious - as well as her £546464.99 an HOUR working in school TC probably give her an extra £658787849794980595 per child per day

Milky milky

11stone4 Thu 07-Feb-13 17:28:21

Can I not get a sensible response without all the bitchiness> minus Mrs vjday!

Lovelygoldboots Thu 07-Feb-13 17:28:40

11stone4 yes I am being an arse but people make decisions based on a broken system. Dont judge your friend.

gordyslovesheep Thu 07-Feb-13 17:28:50

yes - yabu smile

usualsuspect Thu 07-Feb-13 17:28:55

I used to have that milko emoticon on my MSN grin back in the day.

Writehand Thu 07-Feb-13 17:30:37

HollyBerryBush, you wrote to simplify, as I understand it, you get tax credits in a low paid job? So effectively you pay tax, then they give you some of it back in these credits? have I got that right?

Well why not raise the personal allowance and stop collecting the tax? would save millions on employing people taking it in, counting it, sending it to another depatrment to be sent out again.

No. It doesn't work like that. I get Working Tax Credits and don't pay tax at all because I earn so little. It's a lot of money to me.

Thing is, when my DSs are both 18 my financial position will become dire as from the Tax people's pov I become a single person (only technically single as I will be supporting both boys in education when, of course, they have no source of income). This whole business of adult children in education gets very difficult money wise.

gordyslovesheep Thu 07-Feb-13 17:30:49

grin

CloudsAndTrees Thu 07-Feb-13 17:31:41

This is a common story. The amount people earn and spend in childcare and travelling to work often doesn't amount to more than they currently get on tax credits, and sometimes if it does, it makes a difference of next to nothing.

It happens a lot, and that's why we need benefit reform and UC.

ihearsounds Thu 07-Feb-13 17:32:01

Yes wtc, without the childcare element decreases. But this is off set because income goes up.
My tc are less than last year, but the income is up, and we have more money.
Your friend needs to look at total household income, not just tc which will be changing anyway. Tc should be really be seen as a bonus, and the guranteed income used in calculations.

11stone4 Thu 07-Feb-13 17:32:08

Lobelygold, I'm not judging her, I'm trying to make sense of it all. Do the government not want us to work more?

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