£25k disregard doesn't apply to estimates?

andypandy1977

Recently got my final decision though on 2009/10 and I’ve apparently been overpaid by £242. Rang HMRC to ask why this was the case and they told me it was because my income had risen by around £1900 from the estimate I had given.

I of course chirped in with the £25k disregard, but this apparently doesn't apply because I gave an estimate and went over that estimate. According to HMRC I should've told them as soon as I went over my estimate by checking mine and Mrs. wage slips.

This all seems to fly in the face of the spirit of £25k disregard. I was one of those who got caught out; my income going up before it was introduced (I believe it used to be £500?) and ended up £1500 out of pocket. Surely the purpose of the disregard is because everyday people don't think like chartered accountants, and give information in good faith which has a margin of error. It is an estimate after all!

I've requested a dispute form, but any advice before I go though the rigmarole would be great. I was also asked to give an estimate this year so I’m worried I’ll be in the same position next year.

iamana1ias

Be grateful you get anything. One day you might actually have to cope on what you earn (shock horror).

emsywoo123

iamana1ias wrote: »

Be grateful you get anything. One day you might actually have to cope on what you earn (shock horror).

Why do people like you even come on the benefits board?

AnxiousMum

In reality though - we all have our P60's now, or should. So by the cut off date of July 31st for finalising your renewal, we should be able to provide HMRC with our actual earnings rather than an estimate. We also know that our award is not FINALISED until they actually have this information for the previous year. If they were to pay out everybody on estimates alone, can you imagine the games people would play if they didn't then require proper and actual figures to finalise the award?

helenj36

is the over payment just what they have paid you from april 10 till now.as normally its based on year befores income so last year when you renewed it would have been based on your 08/09 income then they would have asked you what you may earn in 09/10 if this was an estimate.then they would have been paying the start of this years tax credits by using the estimate you gave them until you gave them your income details for 09/10 which then they will then recualate.so they may have just over paid you for april,may and even june of this year

bestpud

There is an explanation at the top of the board but basically the disregard is lost if you estimate a lower income and receive a higher award because of that.

It has to be that way or we would all just call in April and say we are only going to earn £5k this year, even if we think we may actually earn £30k!! We'd all be quids in!!

You told them to use a lower income than your actual income from the year before and you were paid extra on the strength of that. You actually earned more so you have been overpaid.

There is no point appealing it.

Perhaps you could see it as an interest free advance?

toonbaz

as the previous poster has said how could they possibly be expected to apply the disregard to estimated incomes.
i could phone up each yr and say i got paid 20k last yr but this yr will be nil then get thousands in tax credits only to declare 20k again at the end of the yr and not have to pay anything back so i could do it all over again the following yr.
dont waste your time with the dispute, you've not got a leg to stand on, if you arent completely sure about your estimated income then just leave it the same as the previous yr if its less at the end of the year you would get your extra entitlement then anyway.

System

You won't win the dispute because you underestimated your revised income.

The £25,000 disregard explanation on this forum clearly explains how it works and why it is better to over estimate you income.

BTW the disregard was originally £2500 but many many low paid claimants were hit hard when a change of circumstance meant an increase in income above that. Also the government are intending to reduce the disregard gradually. I believe the first drop will be to £10,000 in April 2011.

The government also intend to introduce a disregard for income falls in April 2012.

http://www.hmrc.gov.uk/budget2010/individuals.htm#3