Child Tax Credit advice

Eros1000

Could anyone who understands the Child tax credit system advise us on a problem?


Our daughter and husband have been told they have to repay an overpayment for Child tax credit for tax year 2016-2017.
Our daughter’ salary was 11.5K for that period. Our son in law’s salary was 22K per annum but had a new job beginning start of January 2017 on a salary of 38K.
On Jan 4 2017, HMRC were told of the change in circumstances and weekly payments stopped thereafter.
Last week, as the result of their annual review they have been told there was an overpayment of £2200. Basically all the money they received in 9 months last year.
HMRC seemed to have combined both salaries and spread over whole tax year and are now saying they are not entitled to the money paid to them in the first 9 months of the financial year, even though her husband was earning 22K and they needed the money to get by.
HMRC had obviously awarded them the child tax credit (April – Dec 2016) as that is what they were due. Why now that he has been getting a higher salary since January and payments were stopped, can HMRC claim it back?
Is it worth disputing this as being unfair?
thanks

Icequeen99

Eros1000 wrote: »

Could anyone who understands the Child tax credit system advise us on a problem?


Our daughter and husband have been told they have to repay an overpayment for Child tax credit for tax year 2016-2017.
Our daughter’ salary was 11.5K for that period. Our son in law’s salary was 22K per annum but had a new job beginning start of January 2017 on a salary of 38K.
On Jan 4 2017, HMRC were told of the change in circumstances and weekly payments stopped thereafter.
Last week, as the result of their annual review they have been told there was an overpayment of £2200. Basically all the money they received in 9 months last year.
HMRC seemed to have combined both salaries and spread over whole tax year and are now saying they are not entitled to the money paid to them in the first 9 months of the financial year, even though her husband was earning 22K and they needed the money to get by.
HMRC had obviously awarded them the child tax credit (April – Dec 2016) as that is what they were due. Why now that he has been getting a higher salary since January and payments were stopped, can HMRC claim it back?
Is it worth disputing this as being unfair?
thanks

Unfortunately that is how tax credits work, higher income in the later part of the year can impact on an award earlier in the year.

So the answer is yes, they can claim it back.

IQ

Eros1000

Thanks - I suspected that might be the case but wasnt sure.
If our son in law had started his new job in the new tax year 2017 presumably they wouldnt have been hit.

ChasingtheWelshdream

Unfortunately yes, as the award is calculated on total income over the award period. Presumably his pay increased enough from January-April to take him over the threshold for 2016-2017.

Edit - I hadn't seen Icequeen's reply. As she said.

As helpful as tax credits are, I do know some people who would be entitled to something, but are too scared to claim in case their circumstances change for the better, meaning they would need to pay back a huge amount.

zagfles

Eros1000 wrote: »

Thanks - I suspected that might be the case but wasnt sure.
If our son in law had started his new job in the new tax year 2017 presumably they wouldnt have been hit.

No but his payrise earned him a lot more than £2200 extra from Jan-Mar so they wouldn't have been better off if he'd got the job later.

zagfles

paulandjanine wrote: »

Unfortunately yes, as the award is calculated on total income over the award period. Presumably his pay increased enough from January-April to take him over the threshold for 2016-2017.

Edit - I hadn't seen Icequeen's reply. As she said.

As helpful as tax credits are, I do know some people who would be entitled to something, but are too scared to claim in case their circumstances change for the better, meaning they would need to pay back a huge amount.

They shouldn't be scared if they understand this.

If their circumstances change for the better, then simply put aside the extra money they are getting from the payrise/better job or whatever. The tax credits overpayment resulting from the payrise would almost certainly be a lot less than the extra they are earning, so they won't be worse off provided they understand this.

The problem is when people get a big payrise without realising tax credits to date might be clawed back, and spend all the extra they're getting.

Eros1000

Many thanks for comments folks.
I think Zagfles last comment sums up the problem.
Having told HMRC at the start of the new job and the payments ceasing, our daughter and son in law never imagined they would be asked for the previous 9 month payments back. As far as I am aware the person at HMRC did not mention this as being a possibility.

Darksparkle

The adviser who made the change wouldn't have seen how the change altered the award as the new award isn't calculated instantly. An amended award notice would have been sent to them.