Tax credits annual review - worth making a claim?

kerrymay

Hi,

We haven't claimed any tax credits for the last six years as my husbands income has been above the threshold for being eligible. However 2008/9 has been a really bad year for us and huis income went well below the threshold. I have received our annual review packs and don't know whether to bother to make a claim or not. We know that in 2009/10 he will be back up above the threshold as he has negotiated a higher basic salary. If I claim on the basis of our 2008/9 income will we then be made to give it back at the next review?

I don't understand how it works!! When we needed it in 2008/9 we couldn't have it because of the year's income we had before. But (if I'm right) we can have it in 2009/10, even though we should be able to cope without it? And then will we have to give it back anyway?? I actually think I might not claim at all as I am sure that there are people that probably need it more than us anyhows but I thought I'd seek some advice!! Thanks x

brians_daughter

claim, if you are entitled to it, as long as no changes that HMRC want to be notified about i believe that there is now a 25k buffer. so as long as still in same job same hours and the award is based on actual income you should be fine. i am sure if anyone knows any different they will be along to advise asap

Pepzofio

Tax Credits are only provisionally based on your previous years income - at the annual review your actual income is used - if it is less than the previous year an adjustment is made and you are repaid any underpayment. If it is <£25k more (than last year) no adjustment is made due to the earnings disregard, but if it is >£25k more they will adjust and you will have to repay an overpayment.

You say you have not claimed for 6 years but are still getting annual renewal packs - does this mean you complete the annual renewal each year? As if so, then you are claiming TCs, you just haven't been entitled to any!

If this is the case, claim now and you should receive a lump sum for any 08/09 entitlement. As long as you do not earn £25k more in 09/10, you will also receive an award based on your 08/09 earnings. From 10/11 it will be based on your 09/10 income so you will probably lose your entitlement at this point.

If you know your income is going to be lower than the previous year you can call and give an estimate mid-year which they will use to calculate an award, but by doing this you lose the £25k disregard, so if you accidentally underestimate you will more than likely end up being overpaid.

kerrymay

Well, thinking about it now, I think maybe it's been 5 years since we were entitled to anything but yes, I have been filling in an annual review each year since and just keeping them up-to-date with the birth of subsequent children. I have had a letter each year saying my entitlement is £0 and to do nothing if the details on the form hadn't changed. I rung them this year because we have had another baby and as I said the income for 2008/9 was a lot less. This is based on the actual income figure shown on my husband's P60. I can't give a definite figure for 2009/10 but I know he will earn at least £17k more, and possibly more than that depending on whether he gets any bonuses this year.

I think from what you've said we will definitely be entitled to something then for 2008/9 and not have to repay it and then 2009/10 onwards we will not be entitled again which is fair enough. I hope I've got it right now!

Thanks for all your help - much appreciated!

kerrymay

Actually, having re-read your advice Pezofio I think that they wil possibly give us an award for 2009/10 based on the 2008/9 earnings and we may well go over the £25k and then need to give it back. Am I able to accept the 2008/9 lump sum from them and then tell them I do not think we will be eligible in 2009/10? Or do I need to take the money from them, put it aside and then give it back to them at the next annual review??? TIA!!

kerrymay

Just to update - I have had a lump sum payed into our joint account on Friday with the reference Child Tax Credit for £540. I am assuming this is the lump sum previously mentioned for 2008/9. I was surprised it has been done so quickly without me even signing any paper work etc. Will there now be a monthly amount payed in that I need to keep aside to give back next year as I know that we will jump over the 25k mark? I really thought I would have had something in writing from them first though!