Tax credits

Rivernight

My husband currently works about 55 hours a week and I work 17.5. We will earn in excess of £25k this tax year. However, m husband has been informed that there could be possible redundancies or at least a reduction in hours possible down to 30 a week before the end of the financial year. Obviously this could mean a dramatic decrease in our income but because tax credits are calculated on the previous years earnings, we will see a massive reduction in our tax credits next tax year (we got quite a lot of tax credits this year as I was on maternity leave in the last tax year).
If when it comes round to renewal in the new tax year I explain that there could be a reduction in our income, would they base our award on the year 2008/2009 or our estimate for the year 2009/2010? If they used the latter, is this a recipe for disaster? could we end up getting overpaid?

Any advise much appreciated

Many thanks

tweetyshells

You would be better phoning them as soon as you know a rough idea on what you will be earning for the current year and they can adjust during the year. It depends how much of a difference it is if they do it now or not i have found.

System

Your award will continue to be based on 07/08 income unless you tell them of a reduction.
If you do give them an estimate of your reduced income then it is better to over-estimate. This is because when you tell them your revised estimate you will lose the £25,000 disregard. This means that come next year if you declare your 08/09 income as being more than your estimate you will have an overpayment. Any money owed to you at the end of the year due to providing an overestimate will be paid to you when you complete your annual declaration.