Child Tax Credit - increased income

Alleycat

Hi all and apologies if this has been asked before but I could not find it if it has!

We are currently in receipt of the basic child tax credit award. My partner is getting a pay rise at the end of December which will take our joint salaries to just over £60,000 (gross) per year. This will be for just three months until the beginning of March when our income will decrease by £13,000 as I will be going part time.

As the change is not over £25,000 per year, do we need to inform the Inland Revenue and will it impact on our award (i.e. lose our entitlement)?

I hate tax credits with a passion as they are so blooming hard to understand!

Thanks, Alleycat

cw18

If it takes your Annual Income (as in what you'll actually receive from 6/4/08 to 5/4/09) over the point they start to reduce even the basic amount (around £54k now I think) then the sooner you tell them the better. When your income is this high they always calculate using this years figures, so if you don't tell them they'll claim some back after the end of year review.

Until a couple of months ago I didn't realise they based on the previous tax year unless this years was lower!! When I queried ours not dropping when I notified them that this years was going to be about £9k higher than last -- on the basis that in the past an increase of a few hundred caused a drop in what we got -- it turned out to be because our income was up at that level. Last year was artifically low due to me being on extended sick leave (I was always the main salary), so even last year was calculated on 'current year' leaving me to assume they always used current year figures :rolleyes2

Auzelia

personally, as it is under the £25k allowance that the tax credits office allows I wouldnt call to inform them, but I would make a not of calling them on the 5th of April to give them your last payslips total for you and your husband (until you get your P60) so that you dont get overpayed.

Then once you drop to part - time and drop £13k call them back and give them the new information.

cw18

They don't allow the £25k if it puts you above the £54k(ish) mark..... they then want to know (and adjust what you receive because of) all increases !!

Alleycat

Hi, thanks for the advice. Its so frustrating as its only for a couple of months and then our income drops again! Will give them a call in January to update as OH's first month with the increase will be at the end of December.

clairec79

You could estimate the years income now with his rise and what you lose in March

Alleycat

It runs April to April doesn't it?

cw18

6th April to 5th April the following year. But for people paid at the end of the month it's basically April to March as those are the payslips included.

cw18

I think what clairec79 means is to do like I always did.......

don't phone now with the extra, and then again early March to report a drop. Calculate now what you expect the end of year figure to be, and phone with that as your estimated income. I used to do this several times a year when one of us got a bonus I hadn't anticipated or a run of overtime, and it meant we were never more than about £70 out at year end -- so never had any clawed back the folloing year :T

clairec79

That is what I meant cw18

trevormax

In my opinion, its always best to tell them anything you think might affect your entitlement. Even if it doesn't actually affect it, they will have it on record that you have informed them and they will have a difficult time trying to claim any overpayment back in the future as they had the information.