Wednesday, 1 October 2014

Quick question

I'm not clued up on Working Tax Credits, but I'm sure some of you are, so answers, please:
If someone who is on WTC gets more in their pay packet, through a rise in the minimum wage, or a rise in the tax threshold, do they get a corresponding decrease in WTC, so that their income remains the same?  Yes, no, more complicated?

10 comments:

  1. I asked myself the same question when watching the news today.

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  2. i am surprised no-one has spotted the contradiction in what was announced at the tory conference. cam and gideon made the promises you allude to, but no-one noticed that dunckin' do-nut also announced that UC will be rolled out nationally next year. so, as no-one knows what the tapering arrangements will be on UC, it's impossible to answer your question.

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    1. I was asking about the current system, which still operates for the vast majority of claimants. And I assume that there are tapering arrangements under UC as it applies at the moment.

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  3. You get about £25 per week WTC if you are working 30hrs a week on NMW.

    Re the increase in the PTA this was due to go up anyway and the Tories have not accounted for the extra increase. There is no substance to the policy.

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    1. Sorry, but I'm none the wiser. WTC is surely affected by the amount you're earning rather than the number of hours you do.

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    2. You can only claim working tax credit if you are working more than 30hrs a week i.e. eligible to pay tax. How much you get thereafter is dependent on earnings.

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    3. You can claim WTC if you are working more than 16 hrs. I am self employed and doing 12hrs for £12/hr at the moment, the helpline told me last month I had to notify them when it got to over 16 hrs

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    4. It is 30 hours if you are single and aged between 25 and 59; the Tories increased it from 16 in 2012. If you have children or are disabled or over 60 years of age you can claim if you are working 16/24 hours.
      http://www.hmrc.gov.uk/manuals/tcmanual/tcm0114120.htm

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  4. Don't think tax threshold will affect WTC as I believe it is calculated on pre-tax earnings. According to the HMRC calculator, I would qualify for WTC:

    £9750p.a. = £702.99 WTC
    £10000p.a. = £650.75 WTC
    £12000p.a. = £232.89 WTC

    So, a sliding scale, but based on current HMRC calculations, income would increase even after accounting for reduced WTC - However, once you go over your tax allowance, income tax would be payable and you may also find N.I. contributions increase.

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    Replies
    1. Thanks, that's what I wanted to know.

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