Impact of Paid Employment on the
Income of a Lone Parent with One Child

Income when unemployed:

One Parent Family Payment (OFP)	£100.70 per week
Rent Allowance	£650 per month
Back to School Clothing & Footwear	£78 per year
Total weekly income for this family	£252.20 per week

Mary also has a medical card

Mary has been offered a job at £5 per hour for 39 hours a week. She wants to know
how this will affect her payments.

Gross income from employment	per week	£195.00
	per annum	£10,140.00

Step 1: How will this impact on her OFP?

£115.38 of income is disregarded	(£195 – £115.38)	£79.62
Means assessed	(£79.62 divided by 2)	£39.81
New rate of OFP		£66.70

Step 2: How much tax will she have to pay?

Total gross income	(£195.00 + £66.70)	£261.70
As OFP is taxable, this is her total taxable income	(£261.70 x 52)	£13,608.40
Tax liability	£13,608.40 x 20%	£2,721.68
Tax credits
Personal credit	£5,500 x 20%	£1,100.00
Lone parent’s credit	£5,500 x 20%	£1,100.00
PAYE credit	£2,000 x 20%	£400.00
Total tax credits		£2,600.00
Income tax payable	£2,721.68 – £2,600	£121.68
(As Mary’s earned income is less than £280 per week, she is not liable for PRSI or the Health Levy)
Mary’s net income per annum £13,608.40 – £121.68 £13,486.72 per week		£259.36

Step 3: Will Mary be eligible for Family Income Supplement?

As Mary is working more than 19 hours a week, she is eligible for FIS
FIS income guideline:£278	£278 – £259.36	£18.64
	£18.64 x 60%	£11.18
Total net income including FIS	£259.36 +£11.18	£270.54

Step 4: What will the impact be on Mary’s secondary benefits?

Medical card
As Mary was unemployed for a year, she will be entitled to keep her medical card for 3
years after taking up employment, regardless of her income

Rent Allowance:
Mary is working more than 30 hours a week, so she is not eligible for Rent Allowance

Back to School Clothing & Footwear Allowance:
The income limit for a lone parent with 2 children is £141 per week, and is based on
gross income. Mary’s gross income is £266.12, therefore she will lose this payment

Step 5: Comparison of out-of-work and in-work incomes

When Mary was unemployed, her household income was £252.20
Having taken up employment, her household income is £266.12. She will keep her
medical card, but will have to pay childcare costs from her in-work income.

Would Mary be better off on Back to Work Allowance? (BTWA)

BTWA in year 1	£100.70 x 75%	£75.53
Wages (as BTWA is tax free, no tax is payable)		£195.00
Total		£270.53

As Mary’s total income is more than £250 a week, she cannot retain her secondary
benefits. She will be able to quality for FIS.

FIS income guideline:£278	£278 – £270.53	£7.48
	£7.48 x 60%	£4.49
Minimum FIS payment		£10.00
Total net income including FIS	£270.53 + £10.00	£280.53

Comparison of out-of-work and in-work incomes:

When Mary was unemployed, her household income was £252.20
Having taken up employment on BTWA, her household income is £280.53 – in the
first year (her BTWA supplement will reduce to £50.35 in year 2, and £25.18 in year 3).
She will keep her medical card, but will have to pay childcare costs from her in-work
income.

Source: Irish National Organisation for the Unemployed (INOU).
Forum Report No. 20 – Lone Parents