Calculating Tax Credits

soundman133

Hi there

I know this has been asked before, but I can't find the thread.

Can someone please tell me how I can calculate how much tax credit I will get.

I am self employed, living alone, and I like to project my income for the year (my fiscal year is the same as the tax year), and compare the amount of tax credits I am actually getting paid at present against what I would be entitled to given my current profitability projections.

I hope this makes sense.

I know you discount the personal allowance - and I know that 39% plays a part, but I cannot remember the calculation.

Many thanks.

Stuart

SuziQ

I presume you mean woking tax credit?

There's a calculator here
http://www.taxcredits.inlandrevenue.gov.uk/Qualify/DIQHousehold.aspx

soundman133

Hi Suzie

Thanks for that. I DO mean Working Tax Credit.

However, I want the satisfaction of being able to calculate it myself. Can anyone tell me the formula?

Many thanks.

Stuart

kei_2

Your WTC would be made up of 2 elements, the maximum you can get from each element is the figure next to it.

-Basic Element : £1800
-30 hour element - £735

For every £1 of income over £6420 the elements are reduced by 39p (39%).

So entitlement will be lost at £11035

£6420 + (1800 x 100/39) = £11035

[Deleted User]

The threshold is closer to £12920.

Everything Kei says is correct up to the calculation.

Basic Element £1800
30 hour element £735
Total maximum entitlement - £2535

All entitlement lost at £12920 approx as

£6420 + (£2535 x 100/39) = £12920.


Use this formula/calculation

Income - £6420 = A
A x 0.39 = B
Maximum entitlement - B = Actual entitlement
Actual Entitlement/52 = weekly payment.


eg income £10,000 - Single, aged 25 and works 35 hours p/w.

£10,000- £6420 = £3580
£3580 x 0.39 = £1396.20
£2535 - £1396.20 = £1138.80
£1138.80/52 = £21.90 p/w