Millions of people in the U.K. earn less than £26,000 a year, and pay taxes on their income.
If you earn £26,000 a year, your tax will be approximately as follows:
| Income Tax | National Insurance | Employer N.I. |
| £3900 | £2250 | £2610 |
I included that third column because it is part of the cost to your company of employing you. If they did not have to pay that cost, they would have more funds available to pay higher wages or employ more people. The government takes about £8765 every year, if you earn £26,000. The amount you get to keep is under £20,000.
Many people would be thrilled to earn £26,000 a year. Perhaps you earn less — some people earn £20,000. Your taxes:
| Income Tax | National Insurance | Employer N.I. |
| £2700 | £1530 | £1785 |
If you earn £20,000 a year, the government will receive £6,000, £4200 of which you pay directly. You never see it, because they take it from your pay, but you pay it. The amount you get to keep is about £15,800.
In figures released yesterday, 67,000 households in the U.K. receive welfare benefits in excess of £26,000. Most of those benefits are not subject to tax. To earn an equal income, you would have to actually earn £35,000 a year. Your taxes would be as follows:
| Income Tax | National Insurance | Employer N.I. |
| £5700 | £3330 | £3850 |
If you earned £35,000, you would take home £26,000, paying £9000 directly, and the government would collect almost £4000 more from your employer. Of that £9000 a year in tax that you are paying, some of it is going to families (67,000 of them) that receive more in benefits than you are earning.
The government intends to put an annual cap on benefits of £26,000. It won’t apply to households where a person is disabled or retired. It will still mean that everyone in the U.K. who earns less than £35,000 will be paying tax to support people who aren’t working, aren’t disabled, aren’t retired, and who have more income than them. It will still mean that those who earn £20,000 a year will be paying thousands in tax, some of which will go to people who have almost twice as much income, after tax, as they do.
Some people think a £26,000 cap is too high — but others think it isn’t enough. Last night, the Church of England bishops in the House of Lords helped block the annual cap. They think that some people who aren’t working, aren’t disabled, and aren’t retired need more than £26,000 (tax-free), and that people who work and who earn less than that should pay taxes to help support them.
In other news, the latest figures from the Church of England showed a two per cent drop in attendance from 2009 to 2010.
The Church of England does not speak for all Christians.
Note for non-UK readers:
- £20,000 is about $31,200 (U.S.), $31,400 (Canadian), or 24,000 euros.
- £26,000 is about $40,500 (U.S.), $40,800 (Canadian), or 31,200 euros.
- £35,000 is about $54,600 (U.S.), $54,950 (Canadian), or 42,000 euros.
Mind Renewers 
This is a tragedy that has been going on in America for some time. Unless you make more than $50,000 per year, you would actually make more money and be more financially secure to just stay home and live off of welfare and other goverment support. It simply does not make sense, but continues to happen. But what can we do? It is frustrating and it will make you angry if you think about it long enough.
Sincerely,
Larry Epps
Hi, Larry. They are saying things like if kids have to share a bedroom, then they’ll be considered homeless! Crazy. Our kids have always shared bedrooms.
My focus here isn’t so much on the things government is doing, but on the fact that these Anglican bishops claim to be taking some kind of moral, Christian high ground in blocking reform. What they are doing is not “Christian” in any kind of Biblical sense of what Christianity is all about.
I see. I guess I got on my own “soapbox” there a little…. sorry. You are right, though; the church should be shepherding people and leading them into a deeper amd more meaningful relationship with God, not legislate. We have enough to keep us busy in ministering to the heart issues of the walking wounded.
No problem. Christians SHOULD be thinking about what the government for which they vote should be doing. No problem with what you said, it just wasn’t my focus in the post. 🙂
But you are indeed right that our primary focus is on serving God, not politics.
Scripture says “If a man WILL not work, neither should he eat”. As believers we should always be desirous of providing for our families thru work when possible. Assistance should always be reserved for CANNOT work, not WILL not work. Working that we may have to give to others in need. The Roman Empire got into the “grain subsidy” business. It started during famine, then became EXPECTED. Our nations are following similiar paths. That path does not end well that seeks to satisfy the laziness in our flesh. For it is not a satiable appetite!
Hi, Patrick. The Scriptures are very strong on the merits of work. In fact, one of the key provisions in the Old Testament Law for the poor was not to reap the corners of your field, and not to go back and pick up any grain that got dropped by the reapers. That was to be left for the poor to come behind and reap. So the Old Testament provision was focused on providing a way for the poor to go out into the fields and work.
Which is more compassionate and Christian? To give to the poor yourself, or to vote to force someone else to “give” to them? Where in all of Scripture do we see anything that says Christians should be involved in forcing other people to “give”?
But above all in this case, where do we see that Christians should be involved in forcing people who have worked, and have less, to “give” to people who aren’t working and have more? Maybe we shouldn’t be surprised if government officials mess up so badly that they are thinking that way, but people who claim to be Christians rightly deserve our condemnation for buying into such twisted thinking and claiming it is the “Christian” view.
Jon – Someone made the point on Question Time last night that a number of Church of England clergymen earn less than £26,000! If the Bishops believe that it is wrong to expect those on benefits to live on less than £26,000, what about others in their own church?
I never thought of that, Fraser! It did cross my consciousness that the bishops themselves probably have a little better income than £26K.
Maybe the CofE bishops could pool their resources to help out some of these families who will be negatively impacted. I wonder, if the funds were coming out of their own income rather than “the taxpayer”, if their definition of “need” would change.
I saw that even the former Archbishop of Canterbury has taken them to task for this.
sorry ? but this is usual goverment hype i as a disabeld man in his 50s on my own 26000 what a laugh i get less than a third of that and that includes my benifit for my mobility.and my industrial injuries benifit .i have to much benifits to get help with my rates i have to pay full amount and without compalning.the 26000 includes housing benifit for over priced private rental property,in inner cities.and can i ask does a bishop get help with his housing costs?
Hello, John. I don’t see the justice in taxing people on low wages to give some families tax free benefits which are far more than the workers make. It’s simple. Workers should not have to pay tax to give others more money than they themselves have.
I strongly object to bishops (supposedly Christians) showing no concern for workers who pay the tax to support the benefits. We need compassion for those who work as well as those on benefits. When workers with less income than those who don’t work have to pay taxes to provide those benefits, something is wrong.
This government is getting lots of things wrong, but they are right on this one. There should be a benefits cap. Those who claim to be Christians should not be blocking it.
what you seem to forget is i started work at 15 and paid tax for 40 years in jobs with no wages when you were off sick and no pension deal you seem to think the likes of me has been on benifits since i left school i will lose my benifits at 65 and go onto old age pension its this taring people with the one brush . but your right about cap but you miss the point about the housing benifit it is not easy to get if you do not have kids.its all down to councils selling off houses in the 90s ? there are only 1/3 of people classed as overcrowded and 2/3 have extra room ,therfor the 2/3s will need to pay the bedroom tax when no place to go exept into private sector?
John, this post was simply about a cap, and that it isn’t “Christian” to oppose one. It didn’t say anything about benefits for people on disability or who paid in for 40 years. Please look again, it is all about the cap, and that Christians should support it. It sounds like you agree that there should be a cap.
Supporting a cap is not “tarring people with one brush.” I’m only talking about people who get more than the cap, I’m not talking about you, or anyone on disability.
I have a friend like you. He worked for years but is out of work now. He paid taxes to help others. It is good he gets help now, just like you. But he’s not getting £26,000 a year, and neither are you. If he was, I’d tell him it was too much. And if you were getting that much, I’d tell you it was too much, too. But you aren’t, so I’m not sure why there’s a problem here for you. We should have a cap, and the bishops shouldn’t have blocked it.
dear jon i know where you are coming from my point is only goverments can put a cap on. but because of the sheer cost of housing in the likes of london where do the people go ?the money lenders who own the properties fueled by the benifit are the ones laughing all the way to the bank,london is one of the richest capitals in the world but you still need minimum wage jobs.you are not going to get people travelling in from outside the m25 for £6.19 an hour.it it wasnt for the church who were the only point for charity hundreds of years and still are .in my area council rent for a three bedroom house is £40 per week so you can get no more than that. i would guess you could pay ten times that.my point is you do not get a penny more than you are intitalled to. people seem to think you go down to the dhss and they hand you out wads of notes.most benifits are paid from national insurance payments and the clue is in the name its an insurance?.eg your gran has stayed in the same house since she got married good people round about her she has known for year family just round corner but has son who lives further away.uses her spare room for grandkids to come in school holidays to help with child minding.do you think she is going to move?. no she is going to pay the 14 percent.i know i am ranting but if you are a christian these are all the same arguement in other words sort out the rents out .after old age pensions people in work are next on goverment spending. again sorry for rant but have to sit and watch news all day telling me im a scrounger.
Well, John, part of what you said is about changes to housing benefits. Those weren’t proposed when I wrote this article (it is more than a year old).
The housing benefits change (some call it the “bedroom tax”) is complicated. There is a real problem. Single people on benefits live in 2-3, even 4 bedroom homes. Yet couples with a child (or two) live in one bedroom homes. Younger people with children resent the older people holding onto larger homes. That is really bad for society. We do NOT want younger people resenting older people.
It is a real problem, and no one opposing the “bedroom tax” has offered a real solution. I don’t know the best solution, I haven’t written an article on it, and I don’t know if I will. I talk about political issues at times, but politics isn’t my main focus here. I’d rather leave the whole “bedroom tax” discussion unless I decide to write an article on it. I’m a pastor, not a politician, and I’d like to stay that way. :).
As to people in large, expensive city homes, they should not expect their neighbours (in the broad, Christian sense) to pay for such properties. It would be good to give them extra support to move where they can live within the cap. Millions of people, through the years, have moved when they can’t afford to stay where they are. I know people do not want to move, but we have no right to expect others to pay for everything we want.
I appreciate your interaction. It is good to get another perspective. But I’m persuaded a benefits cap is needed.
There is never enough money to go around. High benefits for some means less money to help pensioners and the disabled. Low-paid workers will resent paying taxes for high benefits, and truly needy people who don’t get enough will resent the high benefits of others. I’m persuaded the bishops were wrong to block the cap.
Jon, the cap on housing benefit will affect one group more than any other, the landlords. If there is a maximum amount that can be paid on housing benefit, then average rents, and therefore average house prices will go down. This will leave landlords with potentially a loss on income, year on year, as rents fail to meet all of their costs including mortgage interest, and potentially a capital loss if house prices fall.
Working family tax credits were introduced to help poorer families, supposedly, but they were available, if both parents worked and earned approximately the same, on family incomes of over £80,000 per year.
We hear a lot of noise about the top rate of taxation, but a family on tax credits where at least one person is earning will suffer a loss of tax credits and an increase in tax and national insurance of over 70%. If they are also on housing benefit, they also lose 75% of their income after tax, national insurance and tax credits, so that leaves the family with a net gain of something like 7.5 pence in the pound, or 46 pence for each additional hour worked at the national minimum wage. Where is the incentive to earn more at these rates?
The need is for a unified system of taxes and benefits, where it is always advantageous to work and not a country filled with clients of state benefits The problem is that such a system will produce both winners and losers and the losers will howl, like wolves at the moon. I cannot remember which politician said of the benefits system, “It is one thing to deny a dog a bone, but is a different matter to take the bone from him once he has it.”
All governments need to have the prayers of all Christians to support them in the quest to find a just and equitable system of benefits and taxes.
“The need is for a unified system of taxes and benefits, where it is always advantageous to work and not a country filled with clients of state benefits.” I certainly agree with that!
I don’t think a total benefits cap of £26K would greatly impact the rental market. Perhaps you know more about this than I do, though. Less than 75,000 families were receiving more than the cap. Many would only be slightly impacted, and would not move. Others might downgrade only slightly. It seems unlikely to greatly distort the market, given the size of the rental market in the cities where this takes place.
evening jon will stop giving you a hard time.but still dont think its unresonable for people to have one extra room. everyone who gets married should only buy one bedroomed house then have to move once you have one child.smacks a bit of 1984.in the next big town over they have only built four and five bedroom houses ,more profit.than a three bedroom.been lucky being older never had more than £30000 mortgage scary for younger ones good night
The main areas that will be affected by the housing benefit cap are in London and the South East of England.
What I found shocking as I had to research this at the time were the incredibly high level of income that a family could have and still obtain tax credits and the marginal rate of tax and loss of benefit even without housing benefit. Most people would rather spend an extra hour with their family than work for an hour at National Minimum Wage and get an extra £1.76 after tax, NI and loss of tax credits. It frightens me that politicians of all parties and none will argue about the motivational benefits of cutting higher rate tax to less than 50% but they ignore this aspect of the tax system altogether.
John, I don’t think it is unreasonable for people to have an extra room, either. But if the government is providing one and two bedroom houses, it is unreasonable for single people to claim the right to the two bedroom houses while a couple with a child or two is in a one bedroom house.
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Fred, the whole incentive / disincentive situation is horrible. There’s more than one example in the tax / benefits / tax credits system where there is almost no incentive to work, or to work more. Brown’s tax credits complicated matters even more. It’s a mess.
I used to say if I were dictator for a day, I could sort out a lot of stuff. Now, I think it would take me a week, at least. 🙂
sorry john ment to say couples not single people in two bedrooms.cant believe derby council was charging £600 a month for a two bedroom house to the phillpotts.think he was worth every penny can you imagine being stuck in that house with eleven kids for seven weeks of the holidays? why were they never given a bigger houe they must have been overcrowded years ago.
The story is a tragedy on so many levels. A stunning example of how bad things can get when a society rejects God’s standards.
hear hear to that.may there god be with them
Well it’s now 2018 and £26,000 a year is no longer a fortune. £500 per week does not deserve to be taxed at 50%. Rents alone are often at least half that amount these days. If you’re not poor, then you are called rich. If you are not rich you are called poor. What about the vast majority of us who fall in between – we are the ones who are being bashed all the time.
I apologise for the delay in clearing this through moderation — the blog has been dormant.
I do not have all the answers, but it seems clearly out of synch with the Bible to say that those who aren’t working and are on benefits should be given a greater income than those who work to provide those benefits. Any religious body, such as the CofE, that can’t see that has lost the plot.