Child Tax Credit - based on 2007/2008 earnings?

Burnley_Lad

My wife has recently given birth to our first child, and therefore we applied for Child Tax Credits.

The award letter arrived this morning, and we've been given a figure for how much we will receive a month. However, this figure has been based on our earnings for the 2007/2008 tax year - when both my wife and I were earning full-time wages.

However, she is obviously on maternity leave now, which results in a greatly reduced household income at the moment - the prime reason for applying for Child Tax Credit in the first place.

My question is - when the claim is re-assessed early in the new financial year and we provide figures for earnings for 2008/2009 (which won't be as much as 2007/2008 as my wife would have been on maternity leave since September 2008) - is it possible that the amount we receive each month increases, as it's based on 2008/2009 earnings?

Thanks in advance to anyone that can answer my query!

cw18

You can call them and give them this years figures -- they will then redo the calculations using the lower of the two years (so this years) and adjust the payments now

Alternatively you can wait for the review pack in April, which means they'll owe you money

Burnley_Lad

cw18 wrote: »

You can call them and give them this years figures -- they will then redo the calculations using the lower of the two years (so this years) and adjust the payments now

Alternatively you can wait for the review pack in April, which means they'll owe you money

that's great - thanks very much.

I think I'll wait until April and submit the figures stated on the P60 form. My wife seems to be getting variable amounts since she went on maternity leave - she's been paying different amounts of tax each month.

When they owe me money in April, will I get this as a lump sum, or added to the monthly total I will get?

cw18

That one I can't answer, as I've never waited for the review pack. I'm sure someone else will be able to (subsoniccoyote springs to mind).

The figure you have to give them is the GROSS figure though, so the fact she pays different amounts of tax each month doesn't matter if you can work out the pre-deductions figure for her.

System

Usually they will make a lump sum payment for monies owed re the tax year which had just ended. They will then use the 08/09 income as the basis for the 09/10 claim.

Burnley_Lad

cw18 wrote: »

That one I can't answer, as I've never waited for the review pack. I'm sure someone else will be able to (subsoniccoyote springs to mind).

The figure you have to give them is the GROSS figure though, so the fact she pays different amounts of tax each month doesn't matter if you can work out the pre-deductions figure for her.

thanks - very good point re. gross figures - I didn't think about that!

Auzelia

dont forget if your wife gets SMP and not MA then she can deduct £100 for every week she is on Maternity leave for this tax year (08/09) then next tax year if she is still on maternity leave she can deduct £100 for every week on maternity leave during tax year (09/10)

e.g 26 week on maternity leave during tax year 08/09 = deducting £2600 from her P60.
and 13 weeks on maternity leave during tax year 09/10 = deducting £1300 from her P60.

I personally always wait until the renewal is due before declaring any changes to income (as long as its not over £25k) as an underpayment is better than an overpayment.

Burnley_Lad

Auzelia wrote: »

dont forget if your wife gets SMP and not MA then she can deduct £100 for every week she is on Maternity leave for this tax year (08/09) then next tax year if she is still on maternity leave she can deduct £100 for every week on maternity leave during tax year (09/10)

e.g 26 week on maternity leave during tax year 08/09 = deducting £2600 from her P60.
and 13 weeks on maternity leave during tax year 09/10 = deducting £1300 from her P60.

I personally always wait until the renewal is due before declaring any changes to income (as long as its not over £25k) as an underpayment is better than an overpayment.

thanks very much for this - my wife has been getting SMP. I didn't realise I was able to deduct £100 per week from the total earnings figure on the P60 - what's the reason for this?

Auzelia

yep for every week she is on maternity leave and receiving SMP during that tax year you can deduct £100.
I think its for tax reasons .. but it states it in the booklet that comes with the pack

Burnley_Lad

Auzelia wrote: »

yep for every week she is on maternity leave and receiving SMP during that tax year you can deduct £100.
I think its for tax reasons .. but it states it in the booklet that comes with the pack

that's fantastic information - thanks very much!

She was on 90% of her usual wage for the first six weeks of maternity leave - I presume that this isn't SMP, and that SMP only started after the 6th week of her maternity leave, and continues for the remaining 33 weeks?

Auzelia

you can deduct the £100 for 39 weeks, so it would include the 6 weeks @ 90%.