Leaked Tax Allowance Rise?
by Gareth Morgan on March 21, 2012
I see that the suggestion is that in todays’ budget there will be, at some point, an increase in the personal tax allowance to £9,205. That’s worth an extra £305 in net income – £5.86 a week.
The problem is, as I’ve said before, that is worth £5.86 to those not on benefits, earning perhaps £100,000 a year. For those lowest earning workers though, who depend on Housing Benefit and Council Tax Benefit, it will be worth much less.
The change in net pay reduces their Housing Benefit by 65% of the increase – £3.81 and reduces their Council Tax Benefit by 20% of the increase – £1.17. That’s a total of £4.98 of the extra pay taken back, leaving them with a total gain of 88p.
I suppose that they can celebrate with about the quarter of a pint of beer that will buy them on average.
Comments
Gareth,
Spot on!
Have you heard anything definitive yet about how Social Landlords contractual rent will be assessed for Universal Credit at the point of new claim or migration from HB?
It’s my understanding, the contractual rent (less ineligible service charges) will be allowable and assessed on a monthly basis (rather than 4 weekly) and that in year 2 and onwards there’s every likelihood that the gross housing element will be increased by CPI rather than the actual increase in the contractual rent?
Secondly, it’s my understanding the housing element of UC will only be shown as a gross figure so anyone affected by tapers will not be able to see how much of their housing costs have been allowed.
What’s your understanding?
Bill Irvine
07733 080 389