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The New Working Tax Credits Criteria And The Consequences For People In UK

Updated on July 3, 2012

The new Working Tax Credits benefit system will change from the 6th of April 2012. The minimum hours of work to qualify will change from 16 hours per week to 24 hours per week. This change will affect many people in a very negative way.

Many families will be affected due to the increase in the minimum working hours which used to be 16 hours but now it is 24 hours.

New Working Tax Credits Criteria From 06th April 2012

The new WTC conditions are:

  • If you have children, you and your partner will have to work a minimum of 24 hours per week. One of you will have to work minimum 16 hours and the other minimum 8 hours per week. Or one of you will have to work 24 hours minimum per week.
  • If you have a disability element then 16 hours minimum work is enough.
  • If you are single, then you have to work 24 hours minimum per week.
  • You can work 16 hours a week to be eligible for Working Tax Credits if your partner is in prison or an inpatient in hospital.

Looking at the new Working Tax Credits conditions above, the implications are that the certain community will suffer on a massive scale.

One community we can look at is the Bangladeshi community in UK. Because more than 80% of Bangladeshi people in UK work in the catering industry, of which some own restaurants and take aways businesses being self employed in most cases, will not be able to show that they are working more than 24 hours per week. This is because their are not enough working hours available due to business being very quiet at the moment.

At the moment, most people who have partners and children are working a minimum of 16 hours per week. So, with the new WTC conditions in effect from 6th April 2012 means that anyone working 16 hours or less per week will not be eligible for the Working Tax Credits benefits. They will have to work 24 hours a week or more.

The reasons why the Bangladeshi community will be affected on a massive scale is because the business owners will not want to take staff on for longer than 16 hours per week because of business being very poor. Even if business was good and the business owners did give extra hours to staff, they would have to pay extra tax to HMRC. If the business is not registered for VAT and the wages and hours increase and overall business goes above the VAT threshold, then the business will have to register for VAT. If the business registers for VAT for making more than £70,000 per year, then that will be a big blow for business if they are struggling to make ends meet.

HM Revenue and Customs
HM Revenue and Customs

Bangladeshi business owners will not be willing to take on staff for more hours because business is quiet, hence the ball will be in the staffs court. So now the decision will be with the staff whether they will be willing to subsidise towards the tax from their WTC payments, but then they will not be left with much money. After that the business owner will not be willing to show that he is paying the staff for more the extra hours due to increased business, if it really does increase. Then the VAT will have to be paid every quarter of the year, which will be an extra payment going out from the business, if they are not already registered for Value Added Tax.

All these implications are serious issues for the Bangladeshi catering industry, as 95% of Indian restaurants and take aways are owned by Bangladeshi people in United Kingdom. This is not an issue with the HMRC, but a big issue with many communities accross the United Kingdom.

We will have to wait and see what the effects are with the change in the Working Tax Credits conditions from 6th of April 2012. Let's hope more people are not pushed into poverty by the coalition government of the Conservatives and Liberal Democrats.


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    • CASE1WORKER profile image

      CASE1WORKER 6 years ago from UNITED KINGDOM

      I can see the problem- affecting people from all communities. The last two jobs I have had have been on flexible contracts meaning that they can have you work for 30 hours one week when they are busy and 5 or 6 for the next few weeks as they are not- I suppose they can claim JSA (IB) but the qualifying conditions are not as easy.