Buried away in the detail of the Chancellor’s budget report is notice of the end of a very valuable incentive for those struggling to work their way off benefit. From April 2012, the 50-plus element will be removed from Working Tax Credit. This means PRIME clients won’t be able to get it any more. This could mean a cut of £1,965 in their income in the first year back in work.
Working Tax Credit is a kind of reverse income tax that you should get if your household income falls below a certain level. For the newly self-employed it provides a useful safety net, as it means you know your income won’t fall to zero even if your net profit does. In the early stages of a new business this is very reassuring, as the risk of low or negative income from the startup is real.
Since the 50-plus element is only available to those who are returning to work after previously being on benefit it seems a very odd thing to cut. And it won’t save much for the public purse, since you’ve only ever been able to claim it for your first 12 months back in work. After that it ceases automatically anyway.
The Chancellor hopes to save £35 million in the tax year 2012-2013 by this measure, and £40 million a year thereafter.
Lets’s hope all of this money returns in some way to those striving to get themselves back into work by their own efforts. It’s a very strange thing to remove one of the few forms of financial assistance that was already well-targeted at those actively trying to work themselves off welfare dependency.
On a more positive note the Chancellor announced that the personal income tax allowance is to rise from April 2011 by £1,000 to £7,475, removing some 880,000 people on the lowest incomes from having to pay income tax at all. Eventually he hopes to raise the allowance to £10,000, but gave no definite date.
This measure should help many self-employed people, since most are set up as sole traders and are taxed primarily through income tax, filling in the self-employed self-assessment form.
There’s more about the budget on the resources area on PRIME’s other web site, PRIME Business Club.
Working Tax Credit – current maximum rates per year
(what you actually receive tapers off as your income rises. The Chancellor has also changed the taper “withdrawal rate” too, up two per cent to 41 per cent, so in future you will lose money faster).
|
Rates and Thresholds
|
FY 2010/11 |
|---|---|
|
Basic element
|
£1,920 |
|
Couple and lone parent element
|
£1,890 |
|
30 hour element
|
£790 |
|
Disabled worker element
|
£2,570 |
|
Severe disability element
|
£1,095 |
|
50+ Return to work payment (16-29 hours)
|
£1,320 |
|
50+ Return to work payment (30+ hours)
|
£1,965 |
Latest Working Tax Credit rates and thresholds
Full budget report on HM Treasury site (as big PDF) Stuff about ending the 50-plus back-to-work element is budget policy decision 41 in table 2.1 on page 48.
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With only the occassional charitable trust around, to assist those made redundant, over the age of 50, and funds for retraining at an all time low ( Most are restricted to £1,000, or less in funding any course, Locksmiths courses to any decent standard, cost in excess of £1,700, Tiling courses that give any real training, are even worse at £1850 and more, ( + 4 weeks of accomodation charges ) retraining as a plumber, or an electrician, or carpenter, to any decent level, in excess of the basics, ,means income from unemployment vanishes for 13 weeks or more and the bill comes to over £11,000, without accomodation, and travel costs ( because there are none in your area ) House moving will cost £2,000 + and the council will not be any help unless they have a substandard home no one in their area will live in except by force.
You may as well take the oldies among us out, and shoot the lot of us, most of us are out of work after contributing hugely to company owners lifestyles, and profits, taxable for the public purse, often with no pension funding, all this does, is move us back onto the state payroll as the “undeserving poor” while this goes on this country can not pay it’s bills, what do people think will happen to the undeserving poor, next ??? sooner pay as an investment in training, even if many fail later, the profits from those who don’t, in taxes will pay for those who failed, as well as ease the burden on the public puirse , is there no one left who understands what the word “investment” means right now, in the House of Commons, in any party !