This is always going to be a difficult subject because no-one wants those in real need to be left destitute.

Nevertheless it is interesting how the extrapolated figures pan out when compared to equivalent salaries. Furthermore, it does beg the question of why anyone should go to work if their prospective salary is less than £34,000 per annum

There are two ways to measure Poverty; either Before or After Housing Costs and most experts come down in favour of After (AHC) because it is not biased by property prices (higher rents) relative to the area where people live (i.e. London .v. Northumberland)

Here is a link to a Minimum Income Calculator

According to Child Poverty Action Group (CPAG) - UK Poverty Line the defintion of poverty level goes something like this

'.. At CPAG, we consider a better measure to be the income a household has left AHC (after housing costs), as this more realistically reflects the amount of money families and individuals have at their disposal. All the figures we use are AHC unless otherwise stated ..'

Taking the CPAG example of a couple with:

  • One child under 14, one child over 14 = £346 per/wk or £17,992 per/annum

The abbreviation AHC (after housing costs) is used a lot in determining levels of poverty, however, it is difficult to find a definative explanation as to what is included in this category as 'housing costs'.

Nevertheless 'housing costs' are deemed to include - rent/mortgage interest payments, structural insurance premiums, water charges, ground rent and service charges

Therefore in order to determine the equivalent value of the Poverty Level to a family in work and paying tax these figures need to be grossed back up to arrive at an equivalent salary/wage

Description Weekly Amount Annual Amount
Poverty Level as above 346.00 17,992.00
AHC Details (Estimated)
   
Rent 115.00 6,000.00
Council Tax 24.00 1,248.00
Water Rates 5.00 260.00
Structural Insurance 2.00 104.00
Total Net of Income Tax/NI 492.00 25,604.00

 

Tax Calculations Weekly Amount Annual Amount
Gross Pay 653.85 34,000.00
Tax Free Allowance 155.87 8,105.00
Total Taxable 497.98 25,895.00
Tax Due 99.60 5,179.00
National Insurance 60.94 3,168.96
Total Deductions 160.54 8,347.96
Net Earnings 493.31 25,652.04

Therefore in order for a salaried wage earner to match the CPAG recommended net amount of £17,992.00 per annum they would need to be earning approximately £34,000.00 per annum

Otherwise it is simply not worth going out to work because (apart from self asteem) you will be worse off than doing nothing!

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