Tax Credits: Why So Complex? discussion

nogginthenog

alwaysonthego wrote: »

I would advice anybody to send their renewals via recorded delivery so if TCO say they have not recieved it, you have proof.

And dont forget to photocopy everything!

alwaysonthego_2

nogginthenog wrote: »

And dont forget to photocopy everything!

Good thinking!

LizzieS_2

MSE_Wendy wrote: »

• Overpayments are unavoidable. Nothing creates more tax credits angst than overpayments. Getting too much money may sound good, but if not when you spend it then the govt says "pay it back." Yet overpayments happen even if you do nothing wrong, as what you're paid is an estimate based on last years earnings, so even small changes can leave you overpaid.

I disagree with the above.

For 2008/09 award earnings were in most cases based on actual earnings for 2007/08. Upon renewing the award last year you would be asked for an estimate of your income for 2008/09.

From April 2009 your award will be based on the estimated income figure you supplied for 2008/09. Upon renewal it will usually change to your actual income for 2008/09.

The important point is that people should keep tax credits up to date with estimated current years income to prevent a potential overpayment from April to renewal.

eadieb

kei wrote: »

Unless this has been changed in the past 2 years for which i apoligise in advance if this is the case, then this is incorrect; if the estimated current year income is lower than previous year income then the band is removed and likewise if the income goes above the band. Any current year income increase within the £25000 band leaves the band intact.

I hear people say that tax credits is based on previous year all the time but this only applies to one scenario; if the claimants current year income has increased but not more than £25000 then the current year income is disregarded.

All claims prior to 06/04/06 were based on a similiar system except as opposed to a £25000 band it was about £2000.

I just wish they would put an extra box in the renewal:- will your income be the same as last year? If not what will it be?

END QUOTE

I don't know the exact rules but its so complex when we try to explain it, I was trying to simplify it. I don't really know the stuff about the bands.

One year I was going to be on maternity leave and so around July time, phoned through with a lower figure of earnings that I'd worked out down to the pound. I needed the tax credits whilst I was on maternity leave , rather than paid at the end of the year on renewal. during that year our company changed the maternity leave policy and paid me about £1000 more than expected. this was within the £2000 disregard at the time, but at the end of the year when I got an overpayment, I was told it was because I had phoned up and given an estimate of income, so I lost the right to have extra earnings disregarded (ie. the £2000).

I found that for me, if a notification letter has the wording something like 'this is based on an estimate of earnings provided by you' then if you earn more than that estimate you will be likely to get an overpayment. Wheras if your notification letters say something like 'based on earnings figure provided for ....whatever the previous financial year was' then you can earn up to £25000 more this year, than that figure and not be penalised.

On the catch with the 25,000 disregard, I agree, that between April and the completion of the renewal for the previous year, if you haven't phoned up with your correct income and it is higher, then you are getting an overpayment for that April to June period. For me, I knew i would and so was expecting it, but sustaining a few months overpayments was worth not risking losing an entire years worth of disregard. If I had lost that 25,000 disregard, I would have been overpaid on nearly £5000. I guess its all just another demonstration of the complexity of the system, it can work in so many different ways for millions of individuals. The problem is that there does not seem to be many straightforward rules, I can phone tax credits many times with the same question and will not get the same answer, so I have become overly cautious and feel I am better off just not declaring income changes until the renewal.

psyangel

Just to cheer you all up according to the Tax Credit people I owe them somewhere in the region of 3000. £2900 is allegedly from the very first year of operation when they were extremely backward in coming forward with how the rules worked. The remainder is an alleged overpayment from moving from a single claimant to a couple claimant. If they decide I should pay this back well i'll still owe them when i'm dead. In my opinion the system is constructed to ensure maximum misery on the people who are least likely to understand how it works. You are guaranteed to end up owing them money at year end - any change of circumstances means you owe. But at least this government tried something positive - heaven help us if we have a change at the next Election!

pj#_2

LizzieS wrote: »

I disagree with the above.

For 2008/09 award earnings were in most cases based on actual earnings for 2007/08. Upon renewing the award last year you would be asked for an estimate of your income for 2008/09.

From April 2009 your award will be based on the estimated income figure you supplied for 2008/09. Upon renewal it will usually change to your actual income for 2008/09.

The important point is that people should keep tax credits up to date with estimated current years income to prevent a potential overpayment from April to renewal.

sorry love, but that completely oversimplifies the whole 'provisional payments' situation. what HMRC repeated say is on o/p caused by an 'increase in income' is usually actually HMRC moving from using guess work to actual figures. unfortantely this doesn't usually happen until they have been paying the award out for 12 months.

its not as easy as just "keeping HMRC up to date". life isn't as strightforward for everyone, and as described in posts above, amending income details 'in year' can end up doing you out of the £25,000 income disregard.

plus your only talking about this last year. overpayments have been hapening from the start (03) because CoC's were not actted on or even logged.

kei_2

tghe-retford wrote: »

• If you just happen to earn above the threshold (which isn't that much) - you get nothing.

Not strictly true, the closer you get to the threshold the less the entitlement becomes until it eventually hits £0. Even if you come slightly under a threshold it does not entitle you to a massive amount of money.

Lets say for example that you are £1 under the threshold, you would only get 39p for each element that you qualified for.

kittykatty_3

Ok, so the name is misleading. And of course it must be really difficult to pick up the phone once a year and give them a call.

But put it this way...

First of all, if you can't afford to have a child DONT HAVE ONE UNTIL YOU CAN! I would never rely on anyone to provide me with money for my child.

And as for the whole "make sure you send it recorded delivery", you get a letter if they haven't received it and they tell you to phone in, your payments are backdated.

If you are above the threshold (£58208), why do you really need money from the goverment? Surley you an afford to live quite happily on that income? If not i would like to swap for a few months, see how you actually manage on barley above minimum wage.

All in all, it's not difficult, I had an overpayment, which was my fault, as i didn't tell them i had moved in with my partner. I'm now paying that back thorugh a direct debit scheme at an amount i can afford, in their words they didn't want to cause financial hardship.

And if its really that bad, why do you bother applying? I bet the vast majority of people who moan about the system get a lot more than i do every month.

I've never had any problems with them and the staff on the helpline have always helped me and are very polite and understanding.

If you don't know how it works or need help, how many people actually bother finding out?

Seriously, give the money to people who don't take it for granted!!!!

Nelmer

I knew we weren't alone with our overpayment woes but I didn't realise it was such common place.

The biggest problem we had was when I moved in with my now husband and his 2 children we told them I had and filled in all the correct forms. However we ticked a box on one form that we shouldn't and a £14k overpayment and 5 years later we are still being kept waiting on a decision.

My advice to anyone claiming is to:
- photocopy everything
- put everything in writing don't rely on phone calls
- always ask the staff on the end of the telephone exactly what you need to know/do and don't assume that they will offer up information (when me wrote to tell them I had moved in and provided all my details no-one told us we had to fill in a specific form to start a whole new joint claim, we can't get the joint claim offset against the overpayment for the last 4 years as claims can only be back dated 90 days)
- there is a different department for each part of a claim (new, renewal, complaint, explanation, repayment, legal action etc etc) so if you pass from one dept to another a new 'case worker' will have to reread your case
- always reply as soon as you get a letter but don't expect a quick a response from HMRC "you aren't the only claimant"!

We still don't know how the tax credits are calculated and still can't work out how our overpayment has been calculated but we won't give in and just start paying it back!!

LizzieS_2

pj# wrote: »

sorry love, but that completely oversimplifies the whole 'provisional payments' situation. what HMRC repeated say is on o/p caused by an 'increase in income' is usually actually HMRC moving from using guess work to actual figures. unfortantely this doesn't usually happen until they have been paying the award out for 12 months.

HMRC do not guess incomes - claimants supply it.

its not as easy as just "keeping HMRC up to date". life isn't as strightforward for everyone, and as described in posts above, amending income details 'in year' can end up doing you out of the £25,000 income disregard.

Amending income details for the current tax year usually only affect this years award if the income is higher than last years income + 25K. This years award can be affected if you choose to have the assessment based on this years income - you would only do that if your income is going to be less so of course you would 'lose' the disregard if your lower income figure turns out to be higher than expected.

I have given HMRC estimates of income for the current year which are higher than last many times - the award has been on previous year income only.

plus your only talking about this last year. overpayments have been hapening from the start (03) because CoC's were not actted on or even logged.

The same thing has happened for the last few years - I didn't see the point in typing dates for every year since 2003.

For those who have been affected by current years income changing the current year award - check the pay in the notices, it may be you are set up on the system to use current years pay by mistake.