Quick question...

Holeypockets

Good evening,

A quick question. Hopefully will only require a quick answer...

After submitting the annual earnings for Tax Credits it transpires that we earned £2K more than we had expected over the year (mostly due to unexpected overtime). Will we have to pay the full £2K back or just the tax credits which would have been earned on the 2K?

I have probably answered my own question but just wanted to check. Also, any ideas how much payback it would be????

bestpud

Did you tell them you'd be earning less in 2008/09 than you did in 2007/08 when you renewed last year?

Or, was your 08/09 award based on your actual income for 07/08?

Holeypockets

Hi, It was based on actual income.

bestpud

You should be fine then, as there is a £25k income disregard, i.e. no overpayment!

Holeypockets

Thanks for that.
£25K Disregard - So I could have done £25K worth of overtime then and not been penalised - is that right???

bestpud

Yep! So long as your award is based on your previous years actual income, you can earn up to £25k extra and won't receive an overpayment.
However, your award for the following year would take account of the higher actual income in the previous year.

And if you tell them at renewal time that you won't be earning that much again and they base your award on the lower figure, then you lose the £25k income disregard for that year.

Also you need to tell them before April of the following year so your provisional award is based on the higher figure, as an overpayment may occur between April of the new year and the time you renew.

In fact, you may have a small overpayment from April to the time you renewed this year, as your provisional award for 2009/10 will have been based on your income for 2007/08. It won't be £2k though, and they will just decrease your payments slightly until it is covered. When did you tell them you'd earned more than you thought? Did you wait until renewal?

Holeypockets

Great - thanks for your help.

I told them at renewal.

AsknAnswer

I always tell them when I get my annual salary increase in August. As I gave them the figure off my P60 at renewal, does that mean I have been tying up their phone lines every year to report a change I don't need to report?

Holeypockets

Sounds like it according to the answer above.

bestpud

AsknAnswer wrote: »

I always tell them when I get my annual salary increase in August. As I gave them the figure off my P60 at renewal, does that mean I have been tying up their phone lines every year to report a change I don't need to report?

It's not wasted as it means they can use the higher figure in April, when they make provisional awards for the new tax year, and you avoid a small overpayment in the period between the start of the new tax year and the time you renew.

But you don't have to tell them.

AsknAnswer

I'll keep telling them then. Thank you!