Income is taxed but benefits that exceed non taxable income are not
As new regulations regarding welfare payments are implemented, new irregularities become visible. The tax allowance affecting all incomes in this country is set below £10,000. This means that whatever you earn that over the tax allowance is taxed.
The anomaly is that welfare payments that far exceed tax allowances will not be taxed. When Chancellor of the Exchequer George Osborne created the new so called 'benefit cap', did he take this fundamental issue into account? Were none of his advisers aware of the anomaly?
A reader suggests that 'the benefit cap is a good idea but just one problem with it I cam see... I'm no accountant but this doesn't add up. If it's capped at the same amount as the average wage of £26,000 what hasn't been taken into account wages are taxed and benefits are not, so the cap needs to be a lot lower in my view'.