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Tax Credit Briefing discussion

edited 15 June 2010 at 2:34PM in Benefits & Tax Credits
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  • pipscotpipscot Forumite
    353 posts
    rrobbo wrote: »
    Thanks PIPSCOT. It's interesting that you say that most people are aware of this £25k limit I only realised that I might be eligible for tax credits from what I read on this website a couple of years ago. I did read quite a bit in the forums as well and can only say that I never heard of the £25k limit. I was actually so surprised that one year's tax credit could be based on the previous year's earnings even if this year's earnings are higher that I actually rang the tax credit helpline to confirm this, which they did without making any reference to the £25k limit. Now that I'm aware of it I can search on the £25k limit and find it everywhere. Unfortunately it's back to the old adage tht you don't know what you don't know.

    I actually thought my circumstances were quite unusal as we also had a new baby in that year who had a disease that we thought was terminal and we spent 2 month's doing split shifts at the cotside in the hospital so that he was never on his own. Fortunately he recovered (Great Ormond Street hospital really is Great) but it meant that we couldn't earn and had to put the other kids into full-time childcare. Nearly losing one of your kids does give you a sense of perspective and losing this cash is nothing by comparison but I still resent being misled (at least I felt that I was). Reading through the web I can now see that lots of other people fall foul of this for lots more mundane reasons. It would be interesting to have a poll to find out how many people actually had heard of the £25k limit and if they knew of the change to £10k that you mentioned. If many people were unaware then this is something that this site could really help with - possibly even pushing HMRC to more explicitly spell out this part of the rules.

    Back to the information provided by HMRC, the form accompanying the tax credits notice lists the "changes you must tell us about" and income isn't listed on this. The separate heading of "other changes to tell us about" states that "you don't have to tell us about the following changes, but it is in your interest to do so because they may increase the amount of tax credits you are due.". It explicitly says that the change could increase and not decrease the amount - if they even said that it could change the amount then it might make more sense. Under the list of things that you can notify it says says "your income goes up. This may not affect your current tax credits, but will affect how much we should pay you for next year.". It really does depend how you interpret the word "may" in the sentence as to whether you think there's anything to be concerned about, unfortunately it didn't leap out to me and I read this form several time.

    I do get your point about letting tax credits influence my dividend payments and I can see that some people may question the ethics about such an approach (which I obviously didn't actually do, just to be clear). To a degree I see it as little different to all the advice to reduce earnings to stay under the 40% limit in order to retain child benefit. There are lots of valid reasons to retain capital in a business (corporation tax is paid regardless) and I probably won't get much work this tax year so probably should have retained more to pay my salary and keep the business afloat. Neither myself nor my wife have ever claimed anything other than child benefit and these tax credits, even when there was no money coming in, so it's not as if we're out to fleece the system at every step. It's simply that I think that my personal tax/benefit position could reasonably be something that influences when and how I receive my income. I'm open to be put right on that though!!!

    Sorry about your little one - it's a terrible time when a child is ill.:( i hope he is ok now.

    Agree with you about the wording on the form. "May affect" is not a great phrase to choose and they could highlight the disregard in that section by adding "and will definitely affect your entitlement if you earn more than £x over your previous year's income" or words to that effect.

    To be clear, I fully understood that you hadn't tried to manipulate your income in any way. (After all, if you had - you wouldn't be faced with the repayment!)

    I think your best bet is to go ahead with an appeal quoting what you were told. If you can remember the date of your call to Tax Credits when you were told not to tell them about increasing income - that would be good because they may be able to trace your actual call.

    (I wouldn't hold out much hope of winning though!)

    Good luck :)
  • pipscotpipscot Forumite
    353 posts
    rrobbo wrote: »
    PIPSCOT, I foget to mention that my corporation tax year is the calendar year, so it's pretty arbitrary as to whether I pay a dividend on 4th April or 7th April but this would obviously have a big impact on my personal tax position. Would anybody else chose one date over the other specifically to keep their tax credits? As this is primarily a money saving site would anybody have an issue with making decisions on that basis?

    Purely from a money saving point of view and leaving aside any ethics as whether it's right or wrong - I know of many people running limited companies who pay themselves a low income one tax year then a high income the next tax year and continue alternating in this way. This can maximise the tax credits entitlements but would need a very good understanding of the disregard rules to operate it. Obviously with the disregard coming down - the benefit will be less.
  • rrobborrobbo Forumite
    58 posts
    PIPSCOT, yes, I can see now why people would potentially do that as I can't see any legal reason why you shouldn't keep money in a Ltd company as long as you like. I'm not sure why but it seems perfectly acceptable, even sensible, to manipulate your income to get child benefit but it just feels a bit sleazy to do the same for tax credits!! We actually have the situation were we may get a dedicated premises for the business and have options to lease or buy. Potentially we could consider buying and paying every penny we get into bringing down the loan meaning no income (or just enough to use the tax free allowance) for a few years. We'd get tax credits again in that situation. I'm not sure if I feel aggrieved that they're trying to take the money back or just annoyed that I was thick enough to get caught out by something like this!!!!
  • edited 16 June 2011 at 2:28PM
    markanddebbie3markanddebbie3 Forumite
    33 posts
    edited 16 June 2011 at 2:28PM
    In April i received the letter saying that as my income for tax year 2010/2011 was above the new threshold my payments would stop and I would be withdrawn from Tax Credits unless I contacted them with new details.

    As I knew my income would be considerably less due to redundancy for tax year 2011/2012 I rang up with new estimates for the current tax year and confirmed that I did NOT want to be withdrawn from the tax credit system and wanted my claim to be renewed.

    I was told my claim would continue, and when I received my renewal form to check the details. i was also told that because I was stopping work in the future I would have to call back then to make that change. i received an award notice for the year 2011/2012, with no mention of the claim being withdrawn if I didn't contact them in the future

    Come the beginning of June when I rang up to inform of my change in circumstances I was told my claim had been ended because I didn't respond to the letter in April in time. When I said that I rang up the advisor checked and told me that the phone call is on record but no action to remove the auto-withdrawal had been taken. Then to cap it off this was after the deadline so they couldn't reinstate the claim for this tax year. I was also told that the payment being made the day after would be last one, and that a letter had been sent out that day (6th June to tell me). I still haven't received any official notification that my payments have stopped and for what reason.

    I am ashamed to say that after being on hold for over an hour I was a little frazzled and angry on the phone, asked to speak to a supervisor who's tone was more or less accusing me of lying about stating that I didn't want my claim withdrawing. At this point i had not had my renewal pack so didnt know my payments would stop. I was angry and ashamedly swore on the phone.

    After a couple of cigarettes and after calming down a bit I rang back to get a message of apology through to the people I had spoken to. The guy I spoke to this time was a lot more helpful, in telling me what I needed to do, but couldn't do anything regarding re-instating the claim. He made a note of the apology to the other advisers, and sent me out an appeals form, so I could ask them to look at my claim again and reinstate. I asked him there would be an overpayment if the claim isn't reinstated and he said there would be as I received payments, from April, that I wasn't entitled to, according to their system. He did say that as my phone call in April is on record that I would be able to dispute that as it was their mistake.

    The last phone calls were on 6th June this year, I posted my appeals form last week signed for, and it was delivered on Monday 13th June. Does anybody have any idea how long it takes to get a reply?

    I finally received my renewal pack today, which states on it that my claim has ended because I withdrew from Tax credits. If only the system sent out another reminder before the final auto-withdrawal deadline the mistake could have been spotted earlier. The cynical part of me thinks this is deliberate. Let people ring up and do what they think is the right thing, then give them no way of checking for a mistake, so that payments can be stopped to people who are entitled to them.

    Anyway rant over. I would be interested if anyone else has been through a similar thing this year or in the past? Or if anyone has any advice for me.
  • edited 5 July 2011 at 7:23PM
    mikonmikon Forumite
    638 posts
    edited 5 July 2011 at 7:23PM
    Good Evening

    I am a bit puzzled with my Tax Credit Review.

    I have looked at mine and my partners P60s for 2010/11 and we have a joint income of £40,700 which takes us above the threshold of £40,000 for the tax year 2010/11 for which we received £547.50 tax credit for the 2 children we have. I am worried now that we have been over paid. However on the the direct.gov website they talk about a threshold of £41,300 as well as a £40,000

    QUESTION : Have I been overpaid for 2010/11


    Secondly the new threshold is £50,000 for 2011/12 with the governments changes to the Tax Credit system our review shows we will get £42.86 a month what I would like to know is will this amount be reduced now that I am earning £40,700?

    I am worried that I have been overpaid and cannot afford to pay this money back or do without it.


    Any help is much appreciated.
    Mikon Riding the DMP Rollercoaster full of ups and downs but i will get to the end. :T
    LBM April 2010. DMP Start June 2010 - 11% of debt paid at June 11 to 11 creditors
    DFD In the Far Far Distant Future.
    :j
    DMP Mutual Support Thread No: 410 / DMP Without a Paddle No: 30
  • Hi all, just wondered if anyone can give me some advice or have maybe been in the same situation as me?
    I recently completed my renewal and a week later has the new payment details. As always I get confused with the figures and I noticed an over payment of over £7000. I couldn't make head nor tail of it so rang them up. I was informed in the 09/10 year, I was over payed £1500 which may of been correct as my wife had started a new job and i had a total estimate figure of £14000 but it was £15500 at the end of the tax year. Now on the 10/11 renewal I put down a that nothing had changed in our circumstances. I was informed over the phone that I declared an income of £5000 which is just my wife's income and my income had not been added. I find this bizarre as I am the main earner and I would not of missed it out. So now they are reclaiming £7000 of this back but I feel they could not of updated my earnings so should I appeal? Can I prove that I did add my earnings and they messed up at their end?
    Can anyone give me any much needed advice please?
    Thanks in advance
    Ben
  • haneshanes Forumite
    156 posts
    Just after some advice.
    my partner has now returned to work, so we have our child in nursery which we pay £154 p/w

    after filling out the hm customs form we have now heard back from them and they are giving us £13 p/w towards childcare. we have questioned this and they tell us it is right. but surely an amount so low is ridiculous.

    my partner earns 14k and i earn 17k

    any ideas?


    thanks
  • Hi, I was wondering if anyone could help me? I recently discovered that when you are on maternity leave and receiving SMP, tax credits deduct £100 per week from what you get as SMP. I had my daughter in December 2008 and made a claim for tax credits. When I did my renewal over the phone in May 2009 I gave them the figure off my P60 and was not asked anything about if I was receiving SMP? I then rang them later on that month and advised I was going back to work in June on less hours so my maternity was ending. After hearing about this deduction off £100 per week I rang tax credits, they checked my award for 2008/2009 and found that this deduction hadn't taken place. They have passed it through to the central Tax Credits office to be looked at bit basically said not to hold my breath but I could appeal? Does anyone know where I stand on this? Any advice would be much appreciated? Thanks
  • kirstle99kirstle99 Forumite
    470 posts
    Part of the Furniture 100 Posts Debt-free and Proud!
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    I've just changed my bank details with tax credits, and the woman on the phone said 'this could result in overpayments, underpayments, or extra payments'.

    I asked her why and she just said 'oh that's just the way the system works'.

    Err, ok. I really don't understand how just changing your bank details would affect your payments in that way? Seemed a bit daft :rotfl:
  • KevinGKevinG Forumite
    1.7K posts
    Part of the Furniture 1,000 Posts
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    kirstle99 wrote: »
    I've just changed my bank details with tax credits, and the woman on the phone said 'this could result in overpayments, underpayments, or extra payments'.

    I asked her why and she just said 'oh that's just the way the system works'.

    Err, ok. I really don't understand how just changing your bank details would affect your payments in that way? Seemed a bit daft :rotfl:
    Maybe it's the same phenomenon as when you update your details - invariably you get one extra payment for some seemingly random amount then the subsequent payments are adjusted. The net effect is zero.
    Baxi Ecogen 24/1.0 Micro-CHP boiler installed Oct-2010; 2kWp Solar PV - 10*200W Kioto, SMA Sunny Boy 2000HF, SSE facing, some shading in winter, 37° pitch, installed Jun-2011, inverter replaced Sep-2017.
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