Renewing tax credits, bit confused

mitchaa

wobblymummy wrote: »

Hi

Our earnings in 2008 were a lot more but I was made redundant at the same time as the tax credits were renewed in April 2009 so instead of amending the award when we came to estimate for the coming year we gave them the estimate of 15k which we believed to be right at the time we renewed, we havent made any changes to the award since we renewed - we didnt change it half way through the year or anything like that

Let me just confirm as still unsure. (Just using imaginary numbers)

08/09 = £35k so award for 09/10 should have been based around this figure of £35k.

Was it?

If not and the tax credit award increased substantially then you will have been overpaid. I.e you told them that you were no longer going to earn £35k, but instead earn £15k. Your award was then based around the £15k figure and not the £35k figure so your entitlement shot up quite a lot.

At the end of the year, you earned £18k, you will have been overpaid between the £15k and £18k awards for the full year

It all depends on if your claim was adjusted or not. If not, then you will not have been overpaid.

Basically, when you were made redundant did your tax credit award go up the month after?

wobblymummy

Sorry I think I am confusing the situation earnings up to 09 joint income were about 24k (joint) In march 09 made redundant

Renewed TC in April 09 and gave estimate of combined income of for 09/10 - 15,500, actual earning for this year is £17,800 so income was £2300 more than anticipated

The claim was not adjusted since we renewed last year

My last day of work was toward the end of March, the tax credits went up from April (at renewal) I didnt get a notice saying anything had been changed, just a new notice with the new payment on when I renewed, it had gone up as we were obviously down to one income then.

I will renew asap, from what you have said I dont think we will have been overpaid but we need to give them new figures for next year and finish off last year

mitchaa

wobblymummy wrote: »

Sorry I think I am confusing the situation earnings up to 09 joint income were about 24k (joint) In march 09 made redundant

Renewed TC in April 09 and gave estimate of combined income of for 09/10 - 15,500, actual earning for this year is £17,800 so income was £2300 more than anticipated

The claim was not adjusted since we renewed last year

My last day of work was toward the end of March, the tax credits went up from April (at renewal) I didnt get a notice saying anything had been changed, just a new notice with the new payment on when I renewed, it had gone up as we were obviously down to one income then.

I will renew asap, from what you have said I dont think we will have been overpaid but we need to give them new figures for next year and finish off last year

I read that as you will have been overpaid as the tax credit payments between April 2009 and April 2010 should have been based on the figure of £24k.

It wasn't though as you are saying your award went up as you estimated 09/10 income to be £15,500 due to the change in your circumstances. It was in fact £17,800 so you will have been overpaid.

It's a bit like having a £40k income and only a basic entitlement to tax credits (£545pa) Telling them you are only going to earn £15k to get an award of say (£5000pa) but actually earning the same £40k as you did before and not expecting being overpaid.

If the system was run like this, everyone would deliberately be underestimating their income to receive additional tax credit awards.

wobblymummy

At no stage did we amend our award during the year, simply when we renewed last April we gave them the figure for this year, like everyone else does.

mitchaa

wobblymummy wrote: »

I will renew asap, from what you have said I dont think we will have been overpaid but we need to give them new figures for next year and finish off last year

This part is the crucial part.

When you renewed last year, you estimated that your earnings for 09/10 were going to be £15.5k? That £15.5k would only be relevant for your provisional awards for this new tax year 10/11 to make sure the time between April 10 to the time you renew, typically May/June 10 that the payments would be correct.

So whatever figure you estimate for this year, will not effect this years claim, it will only effect the little part in April 2011-May/June 2011 whilst waiting for your renewal packs.

The point I was making was, your award should not have went up last April, as the 09/10 award should have been based around your 08/09 earnings of £24k. If it was recalculated based around the £15.5k then you have been overpaid.

UnderPressure

I think the best advice in this situation is to give them a call and renew over the phone they will then ask you all the necessary question simply supply the answers from there.

If there is an overpayment which I dont know they will take it back over the next period, you should be OK though from what you have said you updated them quickly this is all they ask you to do.

I would give them a call at least then you are moving forward

Hope that helps and good luck..........

mitchaa

wobblymummy wrote: »

Not really we only earnt 24k up to April 2009 then our income went down significantly at renewal time, we werent earning 24k for the past 12 months so why would we say we are ?

Are you saying then that I should have told them at renewal time that our earnings were 24k when at the time they were estimated at 15k ?

Your award for 09/10 is based on earnings for 08/09. (This was £24k) So you awards from April 09 to the end of March 2010 should have been based on the £24k you earned in 08/09 yes.

Just like your current award 10/11 is based on last years earnings 09/10.

If both of you lost your jobs now and your income was now £0 for the next 11mths, your awards would still be based on the 09/10 income. UNLESS of course you tell them otherwise and estimate your income for this year. At this point, you are not protected by the £25k disregard, you have to get your figures right.

mitchaa

Everyone would just estimate their income at £10k to get the maximum awards if this was not the case.

You are almost certainly being overpaid just now in this financial year as they will be basing the figures around £15.5k (They should be basing them around £17.8k)

wobblymummy

I am completely confused now, I will just renew and whatever will be will be I guess. Our income for this coming year is now less than last year though as I do not recieve any JSA or salary, I guess this will mess things up even more

mitchaa

There is no need to be confused. Your award for the coming year is always based on the P60 information of the year before.

No ifs, no buts, it's the way the system works.

If someone does notice a drop of income within that year, they then use an estimated figure for their awards. In doing this there is no protection from the £25k disregard so it is essential to get it correct.

When you renew, it asks you what you think the coming years figures are going to be. This does not affect the coming years awards though. All it does is give a basis of what next years awards will be.

So for example when you renew and they ask you what you are going to earn this year, it will have no impact until FY 11-12.

The point that gets me though is you seen your awards increase when you were made redundant and had a reduction in income, this to me means tax credits took your £15.5k figure as opposed to the £24k figure so you will have been overpaid all of that year.

And again this year from April 6th to todays date as you are getting an award based on £15.5k when in fact it should be based on £17.8k, but any overpayment made since April 6th this year so only 1 months worth will just be recalculated into the remainder 11mths to take the overpayment into account.

Im really not sure about last years award though, to me it reads like they have based it on £15.5k rather than £24k. if they have then yes you will have been overpaid.