When the 10% income tax rate was abolished last year it sent shivers down the spines of many low paid workers. I had a (lengthy and futile) conversation with Ziggy in which we attempted to work out how this would affect him. Our only solid conclusion was that he would be dramatically worse off.
Ziggy is at 22 pretty much the primary wage earner in his household. He lives with his mother and younger brother who is still at school. For some complicated reason I've never been fully able to ascertain his mother is not entitled to tax credits. It's something to do with past overpayment, attachment of earnings that made them dramatically worse off and the odd council tax and water rates debt. Whatever the causes, the end result is that mum is not entitled to claim tax credits to top up her (sporadically attended) part time jobs at a local supermarket and youth group.
That leaves the family completely reliant on Ziggy's wage. Approximately £14, 000 before tax. He hands over the majority of his earnings to his mother either in 'keep' when he first has his wages or usually throughout the week/month to pay for basics like food, gas and electric when mum has run out of money.
Ziggy at 22, with no disabilities or children is not entitled to claim tax credits even in his position as main wage earner. The family are also liable for full council tax as there are two adults in the property.
The only practical conclusion for this family on the loss of 10% tax (which will affect mum too) is as Ziggy suggested to go 'off the books' and start to receive wages cash in hand. How many will feel they have to take this option whilst politicians in Westminster continue to whine about how reversing the policy would be 'less fair' ?