CTC - pay rise and overpayment query
lacavera
Posts: 2 Newbie
I have just received a pay increase, starting September 2016 which means our joint income goes from £33,000 per annum to £44,000 per annum. I have notified HMRC and they said it is likely our CTC payments will stop as we are over the £40,000 threshold, which I totally accept. They also said there is likely to be the need for us to repay any overpayment but were unable to tell me how much this would be as it is a 'hypothetical' situation. I realise that we won't know the full picture until April 2017 but the thought of having to repay huge debt is filling me with dread. Does anyone know how the overpayment is recalculated? Up until this September, we were under the threshold, so will it be the total of any CTC payments made since then, even though we are still officially under the £40,000 'cap' until the end of this year. Really confused!
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It's based on your income for the tax year (and how that compares to last year).0
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Is your joint income going to be £44k this tax year or for future years? (if you have only received the increase then you will have x months at pre-increase plus y months at increased level)
If at the end of the tax year you are over the threshold for receiving tax credits ...eg if you had known the salary at the start of the year you would not have received any then you may have to pay back the years worth...0 -
Thank you for your prompt replies. I have only just received the pay increase (September 2016 payslip) so this is why I am a bit confused as to whether they will ask for all of this tax year's CTC back (approximately £3000 since April 2016) or a percentage of it, as until last month we were well under the cut-off threshold. Does that make sense?0
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As Caz wrote, it's the total for the year that the CTC would be based on.
If what you've earned to date plus expected earnings up to April '17 would take you over the threshold then I imagine you'd have to repay the CTC you've already received.0 -
Thank you for your prompt replies. I have only just received the pay increase (September 2016 payslip) so this is why I am a bit confused as to whether they will ask for all of this tax year's CTC back (approximately £3000 since April 2016) or a percentage of it, as until last month we were well under the cut-off threshold. Does that make sense?
Makes perfect sense but as said, it depends on the income for the tax year (not just the new salary) and how much of a difference there is from last year.0 -
It's the way they do things!!Thank you for your prompt replies. I have only just received the pay increase (September 2016 payslip) so this is why I am a bit confused as to whether they will ask for all of this tax year's CTC back (approximately £3000 since April 2016) or a percentage of it, as until last month we were well under the cut-off threshold. Does that make sense?
You are usually assessed on last years income but PAID out during this year. So if your income for this year will be greater it therefore results in the overpayment.0 -
It's the way they do things!!
You are usually assessed on last years income but PAID out during this year. So if your income for this year will be greater it therefore results in the overpayment.
Not necessarily. Tax credits is based on last year's income unless the current year income increases/decreases by £2500. This amount is also disregarded e.g.
Last year £20,000 this year £30,000 - Tax credits will be based on £27,5000 -
Firstly, congratulations on the pay rise!
You've had an £11,000 pay rise, but not until your September pay packet. So will have it for the 7 months (I think). So I would assume that your income is going to increase by circa £6,416. If you add this to the £33K, then you get to £39,416 which is a bit below the threshold. If you knock of the £2,500 dis-regard that is mentioned below, then your assessable income will be £36,915. So I would have thought (and I'm no expert in this), that would allow you to go onto a CTC calculator and work out what your award for the year should be. You can then see how much you have / will receive and the difference will be what you would need to pay back.0
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