@ Eurojohnny

Eurojohnny left a comment on my earlier post, Universal Credits/Single Unified Taper:

Unfortunately, you have been a bit selective. Looking at your graph for a single person 25+ you don't appear to take any account of WTC! Looking at the source figures, the tables also seem a bit confused on this, though the graphs seem to pick it up?!?

For example your graph shows someone with income around £100pw netting around £60pw and performing better under your system. In fact, as shown in the appropriate DWP graph, such an individual would be better off under the current system provided WTC is added to their income: if they were working 30+ hours (many self-employed here) their income would be £150pw; even a part-time employee receiving the basic element would be slightly better off now.

You need to redraw your graphs taking care to include basic and 30+ hours WTC.

Well, yes and no to that. I'll call that a score-draw...

The various dotted lines in the charts are taken straight from the Tax Benefit Model Tables, which are based on people living in social housing or renting privately (as explained in the original post), and represent the net income after housing costs i.e. wages - PAYE + Tax Credits (basic or 30+ hours) - rent - Council Tax + Housing Benefit + Council Tax Benefit. The bold lines in my graphs are also the figure for net income after housing costs (which are paid for by the Universal Credit and clawed back via PAYE under the Single Unified Taper).

So I am very much comparing like-with-like.

As to Eurojohnny's specific example...

Table 1.1b of the TBMT shows that a single adult who is an owner-occupier (ignoring any mortgage subsidies) and who is earning £195 a week also ends up with a net income before housing costs of £195 a week (PAYE and WTC net off to nothing); but at this level of earnings, Council Tax Benefit is tapered to £nil, so his or her net income would be £181 per week after paying £14 Council Tax (again, ignoring mortgage costs).

Under my suggestions, his UC would be £65 cash, and he gets a K-code of £131 per week*. So at earnings of £195 per week, the PAYE deducted would be £98**, so his net cash income after notional Council Tax (dealt with via UC/SUT) would be £65 UC + £195 gross wages - £98 PAYE = £161.

So this particular adult would be £19 a week worse off, assuming absolutely no change in behaviour, which he can easily make up by working a few extra hours, and if not, it must be worth £19 a week for the peace of mind that no horrible bill for overclaimed WTC will land on the doormat; or the peace of mind that there is no huge form filling nightmare if the number of working hours or wages goes up or down etc.

As my original charts showed, the black line criss-crosses with the three dotted lines, so at very low incomes, some people will be a bit worse off and some will be a bit better off (more or less at random - but the randomness is embedded in the current rules, and not what I suggested); simply picking one example of somebody who would be worse off, assuming absolutely no change in behaviour, is pretty pointless.

* UC = £65 cash + £14 Council Tax 'paid' = £79; £79 ÷ 31% = £255; £255 - weekly personal allowance [= £6,475 ÷ 52] £124 = £131.

** The lower of [50% x £195] and [31% x £195 + £131].