TAX CREDITS: Explanation of the £25k disregard

flea72

snowball2 wrote: »

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

ok it would all depend on your current situation and entitlement. if you only have one child are present, and no extenuating circumstances, then even with the change in income, your entitlement will stay the same, ie on both those incomes you still only get basic rate CTC of £545/yr

however, when baby arrives if you leave your current income at the lower level, your entitlement will be about £2k extra this year

the choice is yours. if you need/want that £2k then dont inform them of a change in income, and take full advantage of the £25k disregard

hth F

snowball2

flea72 wrote: »

ok it would all depend on your current situation and entitlement. if you only have one child are present, and no extenuating circumstances, then even with the change in income, your entitlement will stay the same, ie on both those incomes you still only get basic rate CTC of £545/yr

however, when baby arrives if you leave your current income at the lower level, your entitlement will be about £2k extra this year

the choice is yours. if you need/want that £2k then dont inform them of a change in income, and take full advantage of the £25k disregard

hth F

We currently have 3 children and currently get higher rate tax credits.

Just to clarify if I dont inform them of the change in income I wont have to pay it back next year? I can't afford to have a massive overpayment.

thx

flea72

snowball2 wrote: »

We currently have 3 children and currently get higher rate tax credits.

Just to clarify if I dont inform them of the change in income I wont have to pay it back next year? I can't afford to have a massive overpayment.

thx

no they wont claim it back

F

twiglet98

gizmo111 wrote: »

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.

I'd be interested to know what your friend's award says - I have only sent my renewal this week and earned £11000 in 2009/10, against an income of less than £5000 in 2008/9 when I was being treated for cancer and had only Statutory Sick Pay, followed by Incapacity Benefit, for 10 months of that year. My youngest has also just finished 6th form so I'm going to lose CTC and the child element of WTC - as if she will earn enough to be able to pay me an equivalent amount, in the unlikely event of her even finding full time work before the end of August

dartsman

Can anyone clarify this for me ...on April 5th 2006 we had overpayments of £1677 on the 5th April 2007 our overpayments had risen to £1981 even though our earnings in year 2006 was £16824 and year 2007 was £19256 meaning a difference of only £2432 well within the £25000 limit..2008 / 2009 /2010 our wages have risen but not by much and well within the £25000 threshold could please somebody clarify for me if this is right and are we entitled to a refund thanks any information would be greatful ,i would rather find out on here than phone credit hotline as i dont want to sound stupid...thanks for reading

flea72

dartsman wrote: »

Can anyone clarify this for me ...on April 5th 2006 we had overpayments of £1677 on the 5th April 2007 our overpayments had risen to £1981 even though our earnings in year 2006 was £16824 and year 2007 was £19256 meaning a difference of only £2432 well within the £25000 limit..2008 / 2009 /2010 our wages have risen but not by much and well within the £25000 threshold could please somebody clarify for me if this is right and are we entitled to a refund thanks any information would be greatful ,i would rather find out on here than phone credit hotline as i dont want to sound stupid...thanks for reading

its a bit late to be thinking back to an overpayment 5yrs ago. unless anyone has access to the thresholds/amounts for that period it may be hard for anyone to confirm whether the overpayment was correct or not

as a basic, we would need to know what your situation was in those years, ie number & age of kids, hours worked, whether lone or couple claim, childcare paid, disabilities, etc

how were the overpayments reclaimed?

F

dartsman

Thanks Flea forgive me for sounding stupid , but does the £25k mean you shouldnt have to pay any overpayments or should not increase your overpayments if your income doesnt increase by £25k,the following year.

flea72

dartsman wrote: »

Thanks Flea forgive me for sounding stupid , but does the £25k mean you shouldnt have to pay any overpayments or should not increase your overpayments if your income doesnt increase by £25k,the following year.

ok first you need to rule out, why you had an overpayment in 2006, and whether it was paid off - you should have been given a reason for overpayment, and how it was going to be reclaimed

for tax year 05/06 the disregard was only £2.5k, so what was your income in tax year 04/05?

for tax year 06/07 the disregard has increased to £25k, so as your income for this year was only £2432 more than tax year 05/06, then the disregard should have come into play - again if you have an overpayment for this year, you would have been given a reason why, and info on how it was to be reclaimed

if you are entitled to tax credits, then any overpayment is always claimed back by reducing the following years entitlement. can you clarify what your income was in tax year 07/08, as this would have a bearing too

are you sure there have been no change in your circumstances, and if there were, you notified hmrc within the correct timescale?

F

breezeblock

I've read all this thread and am still a bit confused. I am self employed.
I claimed tax credits in april 2010 -april 2011 based on my 09/10 tax return and that year I made a loss as I had no work from september to february, and I had a large loss on the previous contract as customer didn't pay.
I had a single claim and recieved the maximum £50ish a week.
Just sorting this years return out (31st Jan deadline) and with around £4500 loss carried forward I'm looking at about a £6500 profit.

Does this mean I will have to pay my tax credit payments back?

Thanks.

breezeblock

Anyone help please?