Checking something out here

Franstrahan

Someone told me on another thread about income tax, so I've checked it online. People earning 150000 or more pay 45p for each pound. So why if people claiming UC work they pay 63p in each pound? Meaning if I went out next week and earned 50 , I would only get 18.50 profit. Have I got this right?

poppy123456

HI,

You are talking about income tax and UC and they are both completely different things. UC is nothing to do with income tax.

Those than earn more than £150,000 per year pay the higher income tax rate as stated here.

https://www.gov.uk/income-tax-rates

janer1967

Hi it's not income tax you pay on UC if you earn more than the allowance your UC is reduced by 63p in each pound you earn. That is because if you are earning you are not entitled to as much benefit. You would still be better off by 37p for every pound. 
I

Franstrahan

@poppy123456
Ok someone put something on another thread so maybe I've just muddled this, but 63p seems like an awful lot. I used to get WTC which varied a bit, but always around 50 a week. Is WTC now scrapped? Still, if I earned 50 next week (I am not working) would I only see 18.50 profit?

Franstrahan

@janer1967
Ok I am just not understanding this at the moment. Possibly.

janer1967

If you are earning then it's only right that UC is reduced to take account of earnings as it is a benefit for those not earning or on low income. I am sure @poppy123456 can explain it better for you. 

poppy123456

UC is a means tested benefit, paid by the tax payer so any earnings will reduce the amount that you're entitled to, if you don't have the work allowance, which i explained to you in a previous thread.

Tax credits no longer exist for new claims, unless you're claiming a severe disability premium in another benefit, which you're not.

UC has replaced 6 of the old legacy benefits, which include working tax credit and child tax credit.

Without the work allowance if you did earn £50 during your assessment period then your UC would be reduced by £31.50.

If you had a work allowance then you would have no deductions if you earned that £50.

Where ever it was that you read about UC and income tax is incorrect because you can't compare either of them. Someone could be working x amount of hours each week/month and claim UC. They would pay tax on their earnings if they earned more than a certain amount each year and this is paid to HMRC who are not part of UC. They would then had a deduction in the amount of UC they are entitled to. If they have the work allowance then they would be able to earn a certain amount of money each month before the deductions apply.

Franstrahan

@poppy123456
@janer1967
Ok, sorry, I never earned enough while self employed to pay tax and didnt find out about WTC immediately.
Somehow the 63p thing still seems horribly unfair, but I maybe just need to get my head round it.
I've always been on a low income and a variable income those 14 years and dont expect things to change from that.
The 63p just seems way over the top to deduct.
Thanks Poppy & Jane

poppy123456

You are comparing it to working tax credits and it's not the same. It's a means tested benefit and if you don't have the work allowance, you can't expect to earn money and then claim UC as well.  Working tax credits had their own different rules, which are not the same as UC.

Some people are better off on UC than they were on tax credits, believe it or not.

My advice is to forget about working tax credits because you're getting confused, it no longer exists.

Franstrahan

@poppy123456
Yes I think the system is confusing. Although I wouldn't say it was all totally clear now, at least I have somewhere to go when these sort of problems crop up. Cant say I like UC and the new system though and suspect I am not alone. 

janer1967

It is what it is and unlikely to change  The main thing is that you are claiming what you are entitled to. After all at least only portion of earnings is deducted . 

Franstrahan

@janer1967
Yes, rather a large portion though. I still dont really get it, but unfortunately I'm 'on the system' now and have to live by the rules, even if they do seem unfair.
Anyway, I'm not earning, just looking at all my options as tired of waiting for something to happen, and need money.
Thanks for your help.

poppy123456

I agree with @janer1967 here, it is what is it and we can't do anything about it. Sorry but you really can't expect to earn money without having deductions because it's a means tested benefit.

As you're not working at the moment you have no deductions being made for this, so there's nothing to be concerned about. If in the future you decided to work then the deductions will apply, if you don't have the work allowance. If you have the work allowance then you'll be able to earn a certain amount of money each assessment period before you'll see deductions.

Franstrahan

The only thing I was thinking of going back in casually, if any of the 3 gardens I had left would have me back, letting them know I'd have to work around bad days etc. So it wouldn't be a job, just pocket money, maybe 25 a week. But that would reduce to 9.25 so just not worth it.
Thanks for all your help both of you.

poppy123456

You could wait for the decision to made on your work capability assessment and if you're given limited capability for work then you'll have the work allowance applied, which will be £287 per month, if you're claiming the housing element.

You do have to be careful though because as i previously advised, if the work you do contradicts the reasons you're claiming LCW then you could be reassessed early and it could go against you once the decision's made.

Franstrahan

@poppy123456
How long roughly does the decision take after the WCA? I'm sure I'll get LCW because of the ASD. So then I would get the work allowance to do some casual stuff.
No it wouldn't contradict as garden work, maybe pet care again later.

poppy123456

There's no timescales for any decision. Being awarded LCW is not based on a diagnosis, it depends how those conditions affect your ability to do any type of work and this is what you'll be assessed for.

Franstrahan

@poppy123456
So if they look at my lifelong work record they will see I've spent most of my time unemployed, unable to hold down a job.
If I can work with minimal people contact, like my pet care and gardening, it may not pay much but I can work like that.
But its limited Capability to take just any job. I dont see how they can fail to give me LCW. Whatever the waiting time.

poppy123456

They will look at how your conditions affect your ability to do any type of work.

Hart86

Another way to look at it is that they are rewarding you with an extra 37p for every £ you earn yourself. 

The 63p taper sounds high but it’s actually more generous than it was on housing benefit, but it’s made more obvious as to how it’s calculated on UC. 

Working tax credit was a very generous benefit, and it was argued it was too generous for self-employed people which is partly why UC is so harsh to self-employed people.

The best thing you can do is as Poppy says, have your WCA and go from there. 

janer1967

Fingers crossed you get LCW like you expect. Let us know the outcome