The truth about tax credits

A family in receipt of tax credits can have one parent work part time and still take home as much money as a barrister or doctor. Don’t believe it? Here’s the proof.

151109-doctor

A part-time worker on tax credits can take home as much as a junior doctor

We published an article by James Ferguson a few weeks ago pointing out that it is entirely possible for a family on tax credits to work very few hours a week but still take home an income similar to that of a junior barrister or doctor. Several readers have taken issue with this.

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Number of children02350235
Gross pay£8,700£8,700£8,700£8,700£25,382£25,382£25,382£25,382
Take-home pay after NI£8,623£8,623£8,623£8,623£23,434£23,434£23,434£23,434
Tax credits£0£9,114.06£11,930.10£17,458.86£0£3,023.82£5,805.42£11,368.62
Council Tax help£492.19£432.91£685.33£753.38£0£0£0£0
Housing Benefit£6,706.26£6,472.35£6,950.00£7,831.89£0£795.98£1,249.16£2,155.52
Child Benefit£0£1,788.80£2,501.20£3,926.00£0£1,788.80£2,501.20£3,926.00
Total benefits£7,198.45£17,813.12£22,067.63£29,970.13£0£5,608.60£9,555.78£17,450.14
Total net income£15,821.45£26,436.12£30,690.53£38,593.13£23,434.00£29,042.60£32,989.78£40,884.14
Equivalent pre-tax income£18,750.00£34,500.00£40,500.00£54,000.00£25,382£33,600£39,500£51,000
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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.