TAX CREDITS: Explanation of the £25k disregard

property.advert

Can I please ask a question which involves vast differences in income.

2009/10 - zero income except for benefits of approximately (rounded for ease) Income Support £3000, Child Tax Credits £2500, LHA £10000 and Council Tax Benefit of £1000. Total (if all should be counted) £16500.

Scenario 1 2010/11 - income of £100,000

Under this scenario and presuming all £16500 for 2009/10 is counted, I would be over the £25,000 disregard and presumably my tax credits award would be based on my income of £100,000.

Scenario 2 2010/11 - income of £5000

Presumably my tax credits would be based on the £16500 from 2009/10 and then re-assessed at year end to reflect the true £5000 income.

Scenario 3 2009/10 income of £16500 and 2010/11 income of £100,000 and 2011/12 income of £5000.

In 2010/11 do I presume the vast increase in income means it will be based on £100,000 income. But for 2011/12 when income drops massively to £5000, what happens ?

Thanks

bambammy

The credits system really baffles me. I stopped my credits way back last year because I moved in with my partner. I never realised until reading this thread we could be entitled. I think I should give the accountant a ring.

gizmo111

This system of the £25K disregard is really confusing. Trying to help a freind who finalised award last year 08/09 with income of £6454. This year she has increased hours and has earnt £26,753 - will she be liable for an overpayment?
Thanks anyone who can work this out.....it's beyond me.

neno234

this confuses me! my tax credits went up when i got a payrise. then when i was made redundant they went down. will just have to wait and see. would like to know what others think of the emergency budget tho

pilgrim59

I was listening to the budget while driving somewhere, and I'm sure I heard him say that the disregard would drop to £10k and then £5k ... surely that will affect most of us?

Our CTC has just gone up because we now receive DLA for our second daughter, and it's a godsend. My heart sank to think we'd now lose that again.

esmerellda

This is all so complicated !

What should you do if you start a new job earning much less than a previous job ? Say if for 09/10 your P60 shows £30k but your new job started in May is lower paid at £20k but you might get overtime to take it up to 30k. Do you leave it as it is or tell them the new 20k figure and risk an overpayment, or would the overtime be covered under the disregard and the new P60 for 10/11 be used for the next years award ?

(Also more complicated as going from a single to a joint claim same date as new job started which is proving a pain in the rear to sort out)

flea72

esmerellda wrote: »

This is all so complicated !

What should you do if you start a new job earning much less than a previous job ? Say if for 09/10 your P60 shows £30k but your new job started in May is lower paid at £20k but you might get overtime to take it up to 30k. Do you leave it as it is or tell them the new 20k figure and risk an overpayment, or would the overtime be covered under the disregard and the new P60 for 10/11 be used for the next years award ?

(Also more complicated as going from a single to a joint claim same date as new job started which is proving a pain in the rear to sort out)

ok, what figure you give would depend on what your circumstances are. ie, how many kids, hours you work, and partners income

if you are already in the basic tax credits bracket then giving them either figure would have no bearing on your entitlement. its only when your income bridges different cut-off points that it might be worthwhile to go with one or the other, or even a midpoint guestimate

if you are sure you are going to get overtime, then i would still quote my income as £30k as its easier to deal with underpayments, than overpayments, come the end of the tax year

hth F

flashnazia

Can somebody just confirm this for me?

The 25k disregard does not mean claimants can earn 25k free of reductions in tax credits.
It only means (I think) you don't have to declare extra income less than 25k until renewal time but payments will then decrease for the next year to take higher income into account?

flea72

flashnazia wrote: »

Can somebody just confirm this for me?

The 25k disregard does not mean claimants can earn 25k free of reductions in tax credits.
It only means (I think) you don't have to declare extra income less than 25k until renewal time but payments will then decrease for the next year to take higher income into account?

that is correct

F

snowball2

Im really sorry to have to ask but im still confused about this, I think this will affect us this coming year and we dont want to end up with a overpayment.

Last year 09/10 dh p60 £21500, this figure used on renewal
This year 10/11 dh will earn in region of £37000.

We are expecting a baby in sept so i planned to call them when the baby is here to add him and advise them of the increased income for this year, is this the right thing to do? how will the disregard affect us? We have never had a major increase in income before.

Thanks in advance for any advice