Massively reduced Tax Credits + Overpayment ... Help Please!

melvis

Hi Guys!

I moved in with my OH on 29.01.07. I was working full time and he was unemployed. We were informed that he was no longer entitled to JSA as I worked 24+ hours per week. We went to CAB regarding our debts as we were struggling big time and they advised us we were entitled to Tax Credits.

We started claiming tax credits on 21.03.07, I advised them we moved in together 29.01.07 and would they backdate? They backdated to 18.12.06 and we received a lump sum payment. They then stopped paying us tax credits due to the 'system' saying my partner was working when he wasn't. They amended this and tax credits were reinstated but only backdated to 29.01.07 so we had an overpayment of £400+.

We appealed against this and they said 'No Deal' so they reduced our tax credits by 10% (approx £8) per week, no problem as we were still getting £69 per week and getting by.

OH started work 19.06.07. We looked on Tax Credits website and they said we did not have to inform them of an increase in wages, which was good as OH was working irregular hours and therefore not guaranteed certain wages every week. I assumed that as it was based on 2006/7 income that we would be ok and that our tax credits would drop in from April 2008 when this years income was taken into account.

OH lost his job and has been unemployed from 15.02.08 to present.

Called tax credits 14 June 2008 to do renewal (remind me to do it on paper from now on!). I earned £15600 approx 2007/8 and OH £7800 approx 2007/8.

Our tax credits have dropped from £74 per week to £10 per week, I expected a drop due to OH income even if I didn't expect so much. This has thrown us into extreme financial difficulty as it costs me £10 per week for travel to work which leaves only my wage to survive on (approx £950 per month). We get no other benefits.

Then we were advised that they have overpaid us £3300 for 2007/8 plus the £140 we still owe from the previous overpayment for 2006/7.

How have we been overpaid? If the tax credits are based on the previous years income then surely we owe nothing? and if they are based on this years income then surely our tax credits should be more than £10 per week as OH is unemployed?

I'm confused ... help me!

alwaysonthego_2

Go to your local CAB with your paperwork and they will speak to TCs on your behalf!

mitchaa

You earned £23,400 in 07/08 hence why only £10pw.

This seems correct to me, also you are in a shed load of arrears also which needs to be paid back.

I get the feeling the £25k income disregard didn't apply to you because you estimated earnings the year before, if this was the case then any money earned over your estimation, as in your partner going back to work and not telling them will obviously have had an effect and pushed you over your estimated earnings for the year.

Well thats what it looks like to me anyway, you should have informed them straight away of the change in circumstance and this is probably the reason of your overpayment.

DreamerV

Thing is, 25k disregard would reply surely....as the lowest their income could be actual would be £0, and the combined 07/08 actual is less than 25k more than that. I have a feeling the overpayment is perhaps as you got wtc, and from the incomes you are saying, you wouldn't have been entitled them at all. Re the fact your payments have gone right down, I'd check that you've given estimates for both of your current tax year incomes, because you're actual entitlement (not talking about what you get from them in the end after deduction of any overpayment recovery) would generally be more if your income has gone down.

mitchaa

DreamerV wrote: »

Thing is, 25k disregard would reply surely....as the lowest their income could be actual would be £0, and the combined 07/08 actual is less than 25k more than that. I have a feeling the overpayment is perhaps as you got wtc, and from the incomes you are saying, you wouldn't have been entitled them at all. Re the fact your payments have gone right down, I'd check that you've given estimates for both of your current tax year incomes, because you're actual entitlement (not talking about what you get from them in the end after deduction of any overpayment recovery) would generally be more if your income has gone down.

The £25k income disregard does not apply when you estimate your earnings otherwise it would be open to a hell of a lot of abuse.

All you would do would be to under estimate your earnings say £24,999 less than what they were in order to be awarded the relevant award for doing so.

Meaning a couple earning £40,000 and not eligible for tax credits could continually tell tax credits that their earnings were £15,001.

As far as im aware the £25k disregard is only for proved income levels straight from P60 evidence not on say so of claimant.

DreamerV

mitchaa wrote: »

The £25k income disregard does not apply when you estimate your earnings otherwise it would be open to a hell of a lot of abuse.

All you would do would be to under estimate your earnings say £24,999 less than what they were in order to be awarded the relevant award for doing so.

Meaning a couple earning £40,000 and not eligible for tax credits could continually tell tax credits that their earnings were £15,001.

As far as im aware the £25k disregard is only for proved income levels straight from P60 evidence not on say so of claimant.

Ah I understand what you're saying now. About the estimates. Although when actually calculated up, it's done on actuals (finally) so I would think that as long as you are not more than 25000 more than the previous yr actual (when finally reported) there shouldn't be an overpayment based on that high income in general.

donnalove

you also lose the 25,000 diseregard if u lowered your income at any time during the year 07/08