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Frank Hovis

April Benefits' Changes

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I hvae no great point to make on this other than that the welfare state is being reformed and for whatever reason little publicity is given to it.  As I have come across a good summary of what is happening in April I thought I would share it:

Free government mortgage payments of up to £200k (!) scrapped:

Quote

 

Support for Mortgage Interest (SMI) is a benefit for homeowners who fall on hard times and struggle to keep up their mortgage payments.

It's existed in some form since at least the 1980s and is currently paid for 124,000 people - almost half of them pensioners.

But not for long - the free benefit is being axed and turned into a loan instead from 5 April.

That loan will be secured on your house and billow with interest, a bit like the mortgage itself.

Personal finance groups have warned this will "weaken the safety net" and "add to the pressure" on families in desperate need.

It's a little-known benefit but could become a big problem. To qualify currently, you must be on Income Support, Pension Credit, income-based jobseekers' allowance or income-based disability benefit ESA. The benefit can only cover interest charged by a bank, not the capital value of a house. It's paid up to a total of £200,000, or £100,000 for pensioners.

 

Benefits freeze continues (think what 3% of the benefits bills represents) and the state will only pay for two children.

Quote

 

The four key benefit cuts coming in to force on April 9 are:

- Year three of the four-year cash freeze in working age benefits, affecting almost 11 million families.

- The 3% real terms cut in working age benefits this year is set to be by far the biggest of the four-year benefit freeze.

- A two child limit for benefit claims, costing up to £2,780 for a family having a third child. This will affect 150,000 families.

- Withdrawal of the family element of support for new tax credit and universal credit claims from families with children, costing up to £545 and affecting 400,000 families.

The rollout of Universal Credit , saving £200m this year due to lower entitlements than the existing benefit system for long term sick and working families in particular.

 

 

https://www.cornwalllive.com/news/uk-world-news/tax-benefit-changes-coming-effect-1393205

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4 minutes ago, Frank Hovis said:

I hvae no great point to make on this other than that the welfare state is being reformed and for whatever reason little publicity is given to it.  As I have come across a good summary of what is happening in April I thought I would share it:

Free government mortgage payments of up to £200k (!) scrapped:

Benefits freeze continues (think what 3% of the benefits bills represents) and the state will only pay for two children.

 

https://www.cornwalllive.com/news/uk-world-news/tax-benefit-changes-coming-effect-1393205

Please Sir, can I have some more benefits cuts

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5 minutes ago, Frank Hovis said:

It's a little-known benefit but could become a big problem. To qualify currently, you must be on Income Support, Pension Credit, income-based jobseekers' allowance or income-based disability benefit ESA. The benefit can only cover interest charged by a bank, not the capital value of a house. It's paid up to a total of £200,000, or £100,000 for pensioner

Not quite true. It was paid at the rate of 2.61%, no matter what rate you actually paid.

So if you got one of those 0.5% above base lifetime trackers, you were quids in.

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How can "pensioners" - who by my inference wouldn't be working anyway - be entitled to have their mortgage paid?

Are those who took out interest-only mortgages with no plan to repay the capital actually the smart ones here?

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30 minutes ago, Frank Hovis said:

Funded by somebody working forty hours a week to pay the rent on some dreadful one bed flat.

Oh dear Frank, you just described my life!

Although my one bed flat isn't dreadful I guess. And I'm probably not putting in 40 hours.

....forget I said anything ;)

 

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12 minutes ago, JoeDavola said:

Oh dear Frank, you just described my life!

Although my one bed flat isn't dreadful I guess. And I'm probably not putting in 40 hours.

....forget I said anything ;)

 

I only had a studio flat!

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1 hour ago, Hopeful said:

Please Sir, can I have some more benefits cuts

Up take of the loan in my area is 30% , be interesting the see if repossessions rise 

My bet is no and that all the internest paid my SMI was wasted , time will tell 

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38 minutes ago, Malthus said:

Up take of the loan in my area is 30% , be interesting the see if repossessions rise 

My bet is no and that all the internest paid my SMI was wasted , time will tell 

Well, repossessions won't rise, but there will be an impact on inheritances.

[actually, there will possibly also be an impact on local authorities --when selling properties to pay for care finding that the DWP got there first]

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1 minute ago, Inoperational Bumblebee said:

Good news. Does the SMI change only affect new applicants, like the two child thing?

I was wondering that, but if they say it will affect 150,000 families presumably it is retrospective. But surely there are more than 150,000 families with more than two children?

Anyway, if it is true it's good news as it will act as a disincentive for migrants with large families to come to the UK. 

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Just now, Austin Allegro said:

I was wondering that, but if they say it will affect 150,000 families presumably it is retrospective. But surely there are more than 150,000 families with more than two children?

Anyway, if it is true it's good news as it will act as a disincentive for migrants with large families to come to the UK. 

They may also just be wrong. I've come to expect low standards in the Internet age...

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Just now, Austin Allegro said:

I was wondering that, but if they say it will affect 150,000 families presumably it is retrospective. But surely there are more than 150,000 families with more than two children?

Anyway, if it is true it's good news as it will act as a disincentive for migrants with large families to come to the UK. 

 

5 minutes ago, Inoperational Bumblebee said:

Good news. Does the SMI change only affect new applicants, like the two child thing?

All existing claimants have been offered loans in place of SMI if they decline the loan help with mortgage interest stops 

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Just now, Inoperational Bumblebee said:

They may also just be wrong. I've come to expect low standards in the Internet age...

Could be that there are 150,000 families on record where a third child is expected but not yet born, I suppose. That would explain the relatively low number.

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6 minutes ago, Austin Allegro said:

I was wondering that, but if they say it will affect 150,000 families presumably it is retrospective. But surely there are more than 150,000 families with more than two children?

Anyway, if it is true it's good news as it will act as a disincentive for migrants with large families to come to the UK. 

No if you already have the benefit tokens they are vaild for the next 16 to 18 years. Like most of these changes (bar those directed at the true disabled who can't fight back) they only affect new applicants. There have IIRC some exceptions called for where eg the third child is the result of a rape.

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A bit off tangent but don't those mortgaged landlords have to pay more tax under the Section 24 rules. Great to see this ratcheted up a bit more.

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1 minute ago, UmBongo said:

A bit off tangent but don't those mortgaged landlords have to pay more tax under the Section 24 rules. Great to see this ratcheted up a bit more.

It just shows what an absolute racket the benefits and tax systems have been for decades.

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2 minutes ago, UmBongo said:

A bit off tangent but don't those mortgaged landlords have to pay more tax under the Section 24 rules. Great to see this ratcheted up a bit more.

They've not had to pay the first 12 months bill yet!   I'd say there will be two effects:

  • I imagine there'll be a lot of surprised individuals come Jan 2019 when the first 'different' tax bill comes in.
  • The real effect will come mid 2019 when HMRC sends letters to thousands of BTL who've never filled in a tax return asking them where their money is.

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8 minutes ago, dgul said:

They've not had to pay the first 12 months bill yet!   I'd say there will be two effects:

  • I imagine there'll be a lot of surprised individuals come Jan 2019 when the first 'different' tax bill comes in.
  • The real effect will come mid 2019 when HMRC sends letters to thousands of BTL who've never filled in a tax return asking them where their money is.

My money is on the surprise those BTL landlords that also claim benefits will have when it turns out they shouldn't have been claiming those benefits for the last 12 months.

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9 minutes ago, Cunning Plan said:

My money is on the surprise those BTL landlords that also claim benefits will have when it turns out they shouldn't have been claiming those benefits for the last 12 months.

Feck it. That isn't actually true.

They built in an exemption so that your income for tax credits is still calculated the old way, allowing all finance costs.

Quote

Once the rules are fully in place, instead of deducting finance costs as an allowable expense when working out property income profit/loss, there will be a tax reduction which, for most low income people will mean they will receive basic rate tax relief on the finance costs as the reduction However, tax credit claimants are protected from the unintended consequences that flow from the new rules so that, in calculating property income, the restrictions in section 272A of ITTOIA (restricting deductions for finance costs related to residential property) and section 399A of ITA (property partnerships: restriction of relief for investment loan interest) are disregarded.

https://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/property-income/

Just mental.

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20 minutes ago, Cunning Plan said:

Feck it. That isn't actually true.

They built in an exemption so that your income for tax credits is still calculated the old way, allowing all finance costs.

https://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/property-income/

Just mental.

You'll have to explain that slowly in english please

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1 minute ago, sarahbell said:

You'll have to explain that slowly in english please

You can have as many BTL as you like, and so long as you max out the debt, and creatively account to make sure you break even, your entitlement to benefits doesn't get affected.

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48 minutes ago, dgul said:

They've not had to pay the first 12 months bill yet!   I'd say there will be two effects:

  • I imagine there'll be a lot of surprised individuals come Jan 2019 when the first 'different' tax bill comes in.
  • The real effect will come mid 2019 when HMRC sends letters to thousands of BTL who've never filled in a tax return asking them where their money is.

Damn, I hoped that was coming this year, what with us trying to move house.

 

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14 minutes ago, Cunning Plan said:

You can have as many BTL as you like, and so long as you max out the debt, and creatively account to make sure you break even, your entitlement to benefits doesn't get affected.

So BTL income is ignored for benefits purposes?
That'd be mad.

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3 minutes ago, sarahbell said:

So BTL income is ignored for benefits purposes?
That'd be mad.

Yes if you get it right. Most BTL doesn't actually make a cash profit so won't affect benefit claimants.

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