Working tax credits. Why so bizarre?

BunnyKillBot

BunnyKillBot

BunnyKillBot

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I was sorting out some finance stuff earlier and the subject of working tax credit came up. It seems to me to be an utterly bizarre set of tax breaks.

1) There is a website describing it, but no online application and no 'request a form' option. You have to ring to request a form to receive by post to fill in and post to make a claim. What?

2) You have to be 16 or over, but that only appears to apply to 16-24 year olds who are disabled or have kids and are working but are poor. Its then available to everybody from 25 above who are working but poor. Why the arbitrary 25 limit? Why are healthy, sane, childless 16-24 year old poor workers penalised?

3) If its for people who are hard working but poor.... why not just raise the basic allowance and scrap working tax credit? It makes no sense.

It seems to me it randomly disqualifies people, makes it hard to apply for and over complicates matters, no?
 
Working tax credit is a scaled approach. It's like having a tax rate less than 20% at the lower end.

You could like you have mentioned just lowered the tax rate at the lower end to say 10% to do the same thing, but then everyone would get it and not just low earners. You also couldn't have negative income tax in order promote working for lower earners without having to give it to everyone.

Also a large part of tax credits is actually child tax credit (rather than working tax credit) which you couldn't do just via a tax rate as you wouldn't be just giving the money to families with children.

Universal tax credit intends to combine it all under one name.
 
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Thats all well and good, but UTC is rather irrelevant while its only rolled it in what, two cities. Also no mention of points one and two :p

Specifically: Why are healthy, sane, childless 16-24 year old poor workers penalised?
 
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BunnyKillBot said:
Thats all well and good, but UTC is rather irrelevant while its only rolled it in what, two cities. Also no mention of points one and two :p
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Well UTC is just a new name for WTC and CTC. Not much more.

It isn't really anything new.

16-24 year old poor are always penalised more and the current government wishes to extend this philosophy further.
 
BunnyKillBot said:
Specifically: Why are healthy, sane, childless 16-24 year old poor workers penalised?
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Because food costs less if you're <25 transport costs less, clothes cost less, mortgages cost less.

Wait, I've got that wrong haven't I?

Ah I see, the Tories set an arbitrary cut off to save some money from the welfare bill whilst realising those who are low paid and aged under 25 have the lowest voting record so they wouldn't get a kicking at the next election for it.
 
There's a woman at my work who's just quit a full-time £26k a year job to take a part-time £12k one just because plus the tax credits in being a single mum with 2 kids under 16 works out the same.


So much for making work pay (and yes I've already told her her it's short sighted given her youngest is 12).
 
estebanrey said:
There's a woman at my work who's just quit a full-time £26k a year job to take a part-time £12k one just because plus the tax credits in being a single mum with 2 kids under 16 works out the same.


So much for making work pay (and yes I've already told her her it's short sighted given her youngest is 12).
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Assuming 12 and 13 year old children and single female who is 43. You only gain ~£5k tax free income per year.

12k income:

12k%20income.JPG


26k income

26k%20income.JPG
 
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I wonder how much money is wasted processing tax credits when it would just be easier not to take the money in the first place.

Still, it keeps the unemployment figures lower. ;)
 
BunnyKillBot said:
I was sorting out some finance stuff earlier and the subject of working tax credit came up. It seems to me to be an utterly bizarre set of tax breaks.

1) There is a website describing it, but no online application and no 'request a form' option. You have to ring to request a form to receive by post to fill in and post to make a claim. What?

2) You have to be 16 or over, but that only appears to apply to 16-24 year olds who are disabled or have kids and are working but are poor. Its then available to everybody from 25 above who are working but poor. Why the arbitrary 25 limit? Why are healthy, sane, childless 16-24 year old poor workers penalised?

3) If its for people who are hard working but poor.... why not just raise the basic allowance and scrap working tax credit? It makes no sense.

It seems to me it randomly disqualifies people, makes it hard to apply for and over complicates matters, no?
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1. The option to apply for tax credits online was recinded after it was shown to be too useful for those intending to defraud the system.

I'm led to believe they may be trying to re-introduce this having somehow being able to magic up a solution, I would assume with the introduction of UC, but perhaps not.

2. Not really sure, but as mentioned by someone else it would sit - arbitarily - with other employment related tariffs like minimum wage etc. It's clearly been a policy decision based on some assessment, somewhere. You'd hope.

3. It was a political fudge and an adminstrative nightmare. The tax credit system was flawed from inception. It amounts to little more than a state subsidy to poorly paying employers.
 
amigafan2003 said:
Because food costs less if you're <25 transport costs less, clothes cost less, mortgages cost less.

Wait, I've got that wrong haven't I?

Ah I see, the Tories set an arbitrary cut off to save some money from the welfare bill whilst realising those who are low paid and aged under 25 have the lowest voting record so they wouldn't get a kicking at the next election for it.
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Did you know about Cameron's speech today or was this just extremely preemptive?

http://www.bbc.co.uk/news/uk-politics-24369514
David Cameron has suggested benefits paid to people under the age of 25 could be cut in an effort to reduce long-term worklessness.
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Bwhahahahhahahahahahhahahahahaha

Damned if they work, damned if they don't.

All the media-spin-speech-highlights today have made me physically vomit. This country is a retching mess.
 
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Yep apparently the reason youth unemployment has rocketed in the last few years is because the world suddenly stopped "nagging" and "pushing" them.

:rolleyes:
 
amigafan2003 said:
Because food costs less if you're <25 transport costs less, clothes cost less, mortgages cost less.

Wait, I've got that wrong haven't I?

Ah I see, the Tories set an arbitrary cut off to save some money from the welfare bill whilst realising those who are low paid and aged under 25 have the lowest voting record so they wouldn't get a kicking at the next election for it.
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They want people to get in work or training or education, rather than dander out into their own house (paid for by taxpayer) and vegetate and do no work training or education.
In theory its a sound policy, we shall see if it remains such when it comes to the implementation. If you can't afford to move out on your own, or can't be bothered to work towards it, then having some sprogs while failing to educate yourself shouldn't entitle you to do so.
Stay at home, live with mummy/granny, breed a bit less, or get yourself some training/education and then a job.
It'll all be in the implementation.
No doubt they have also ran the feasibility studies, checked what % of such people vote tory (not much), checked what % of people are likely to even bother to turn out and vote labour in response to this (probably not much, as they cba to do anything for themselves), and played it against wavering middle classes who might move to tory as a result of this announcement (got to be worth a bit of a swing).
 
OldCoals said:
I wonder how much money is wasted processing tax credits when it would just be easier not to take the money in the first place.

Still, it keeps the unemployment figures lower. ;)
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This is something I don't understand. There seems to be a myriad of tax codes yet they can't invent one that considers the amount of children you have and what housing you live in.

Create a few more jobs in the IR and give everyone personal tax codes that covers everything about their lives and tax people accordingly. Job done.
 
Surely no one under 25 will now vote TORY ??? it would be potential instant financial suicide... if you found yourself in a pickle under that age you are potentially screwed.
 
Hikari Kisugi said:
In theory its a sound policy, we shall see if it remains such when it comes to the implementation. If you can't afford to move out on your own, or can't be bothered to work towards it, then having some sprogs while failing to educate yourself shouldn't entitle you to do so.
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I am so totally for this. Those who want to impose Sharia law in the UK are breeding like rabbits. They'll soon have to think twice, and consider either education or employment, and they may have enough time to pop out 2 sprogs like most of the rest of the demographics.
 
Monserrat said:
I am so totally for this. Those who want to impose Sharia law in the UK are breeding like rabbits. They'll soon have to think twice, and consider either education or employment, and they may have enough time to pop out 2 sprogs like most of the rest of the demographics.
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ooh interesting angle... Tell UKIP and the BNP to do the same in their manifesto.
 
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