WTC / Last Years earnings ??

flashnazia

Thanks

Is this put into practice my HMRC as it isn't what happened to me?

My income went down (SMP - the decrease in salary was less than 25k) and I didn't tell them in CY (lets call it 08/09). When I renewed I told them what I actually got (after 08/09 finished). I then received a backpayment for 08/09.

I assumed the same would happen if salary was more than expected (even if less than 25k) - you'd have to pay it back?

But what I understand from what others are saying here is that: I should not have been given that backpayment; my tax credits for 09/10 would have been based on reduced figure instead.

Sorry to have highjacked your post OP but I want this cleared up so I can advise others.

Icequeen99

flashnazia wrote: »

Thanks

Is this put into practice my HMRC as it isn't what happened to me?

My income went down (SMP - the decrease in salary was less than 25k) and I didn't tell them in CY (lets call it 08/09). When I renewed I told them what I actually got (after 08/09 finished). I then received a backpayment for 08/09.

I assumed the same would happen if salary was more than expected (even if less than 25k) - you'd have to pay it back?

But what I understand from what others are saying here is that: I should not have been given that backpayment; my tax credits for 09/10 would have been based on reduced figure instead.

Sorry to have highjacked your post OP but I want this cleared up so I can advise others.

The system is automatically programmed to do it, so the answer is yes it *should* happen in practice.

Firstly, the 25k disregard has nothing to do with decreases.

If your current year income is less than previous year income, your FINAL tax credits award for the current year (issued after you complete the renewals process) should have been changed to be based on your current year (lower) income.

If you didn't inform HMRC of the fall in income through the year then you may have had a lump sum payment (presumably the backpayment) made to you.

The new lower income should then have been used as the basis for the next years award.

It could be that you are comparing the wrong years. Also, you mention that the same should happen if your income rises - it doesn't because of the disregard.

For each and every year you have to compare 'current year' to 'previous year'.

1. If CYI less than PYI - award will be based on CYI

2. If CYI is more than PYI but the difference is less than £25,000 - award will be based on PYI

3. If CYI is more than PYI by more than £25,000 (i.e. your income has increased by 30,000) then your award will be based on CYI minus £25,000.

If you want to check they have used the right income, you need to list the tax year and your income and then I can tell you which should have been used.

From what you have said though, if your income fell and you didn't tell them till renewals time, you would most likely be due a backpayment.

IQ

flashnazia

Thanks

I think it finally sinking in but it does seem that the system is flawed.

Basically it seems like increase up to 25k is disregarded in CY but anything over isn't, and If you estimate income you don't get benefit of disregard. Don't see the logic in it somehow which is why I didn't get it.

Sorry for trolling lol.:p

Icequeen99

flashnazia wrote: »

Thanks

I think it finally sinking in but it does seem that the system is flawed.

Basically it seems like increase up to 25k is disregarded in CY but anything over isn't, and If you estimate income you don't get benefit of disregard. Don't see the logic in it somehow which is why I didn't get it.

Sorry for trolling lol.:p

But £25,000 is a very generous disregard, and if your income rises by more than that you still get the benefit of some disregard. For example if your income is 09/10 is £10,000 and in 10/11 is £50,000 your 10/11 award will be finalised using £25,000 (instead of 50,000). The £50,000 income will then be used for 11/12. So you are getting a good disregard benefit.

In terms of estimated incomes, what you say isn't quite right. You do get the benefit of the disregard for estimates, if your income rises.

If you estimate a fall in income, but then your income rises, you don't get the disregard on the rise (until income goes above previous year income).

However, they have to do that because otherwise everyone would report a fall in income, get the increased credits, and then report that their actual income was higher. If the disregard applied, that would be madness in that situation.

That is why it is always best to be very careful when estimating falls in income.

For example, if your income in 09/10 was £20,000 and you think in 10/11 it might be only £10,000 and you ring up, your tax credits will be estimated on £10,000 as current year. However, if your income turns out to be £18,000, you will have an overpayment.

The disregard doesn't cover you because £18,000 is still less than your previous year.

As I say above though, you couldn't allow the disregard to apply otherwise everyone would estimate a fall then rise in income. Although the system is flawed in many many ways, I don't think that rule is one of them.

Glad you finally understand it - they certainly don't make it easy!

IQ

50Twuncle

OK - I am starting a (low paid) job in mid September - I have checked on Direct Gov and it reckons that I am entitled to £122.50 per week in WTC.....
When do I apply for this ?
According to the details that I can see - I need to put in a claim for this tax year by July 4th !!!

Icequeen99

21Twinkle wrote: »

OK - I am starting a (low paid) job in mid September - I have checked on Direct Gov and it reckons that I am entitled to £122.50 per week in WTC.....
When do I apply for this ?
According to the details that I can see - I need to put in a claim for this tax year by July 4th !!!

If you are currently unemployed, and don't already have a claim for Child Tax Credit, you cannot claim until 7 days before your job starts. No harm in getting a claim pack now though and just hold onto it until your job starts.

I don't know where July 4th comes into it. That isn't a relevant date for tax credits, unless they are looking at backdating of some description.

IQ

debrag

So as I was on JSA June to November 2009 then working but only getting £600 ish every 4 weeks (crap hours as home carer) I wouldn't qualify for WTC till next year? I'm on min wage @ 35 hrs a week now

Icequeen99

debrag wrote: »

So as I was on JSA June to November 2009 then working but only getting £600 ish every 4 weeks (crap hours as home carer) I wouldn't qualify for WTC till next year? I'm on min wage @ 35 hrs a week now

What makes you think you think you won't qualify until next year? If you meet the criteria now then you can apply. Your claim will initially be based on your income for the 2009-2010 tax year.

IQ

debrag

Icequeen99 wrote: »

What makes you think you think you won't qualify until next year? If you meet the criteria now then you can apply. Your claim will initially be based on your income for the 2009-2010 tax year.

IQ

I thought as a single person you had to work 30+ hours a week in the previous year.

Icequeen99

debrag wrote: »

I thought as a single person you had to work 30+ hours a week in the previous year.

As this thread shows, they generally use income from the previous tax year but it is always CURRENT circumstances that determine what parts of tax credits you qualify for.

It is your working hours now. So if you work 30 now, you may qualify, and they will pay you based on last years income.

IQ