Worried im going to end up over paid

Beki88

Hi I recently made a joint claim for tax credits as my partner moved in, we did as we were supposed to and gave them our income for last year up to april this year.

They said our tax credits will be based on our income from last year.

However this year we are earning around £3500 more than last year, i rang them up and she said that it wont change what we are entitled to throughout this year as it is under the 25k limit.

When I did some calculations online with this years income it was lower payments that when I used last years income :think:

Im just petrified that come april i will end up being over paid if that makes any sense.

Can anyone give me any advice?

I hate tax credits they are too blinking complicated!

freddi_2

Do what I did when I thought I was getting overpaid, put all the tax credits is a separate high interest bank account and don't spend them.

I made quite a few £ss in interest before I had to pay them back but that was in the days of high interest bank accounts.

I still have a few £100 in that account that I am paying back so much per month.

Beki88

Thing is we need most of the money, haven't been able to pay our rent or council tax as what we have been getting hasn't covered all our bills and rent etc.

alwaysonthego_2

The person you spoke was correct your award is based on 09-10 tax year's income so aslong as you do not earn more than £25K then you will not be overpaid. Next year (11-12) will be based on 10-11 so your payment will be reduced. It may be worth ringing TCO in the new tax year to let them know you earnt more as your award will still be based on 09-10 until you put in your declaration.

Indie_Kid

Have you asked HMRC to clarify the situation with you?

alwaysonthego_2

Missis_Beki wrote: »

Thing is we need most of the money, haven't been able to pay our rent or council tax as what we have been getting hasn't covered all our bills and rent etc.

How much is your household income per year?

Beki88

Well she has added it on, so hopefully that will show but I will definitely be making sure they are aware come renewal time next year.

And its about 15k after tax

alwaysonthego_2

Missis_Beki wrote: »

Well she has added it on, so hopefully that will show but I will definitely be making sure they are aware come renewal time next year.

And its about 15k after tax

You may be eligible for help with your rent.

Beki88

alwaysonthego wrote: »

You may be eligible for help with your rent.

I was told by my local council office to hold off making a claim until tax credits had been sorted, they said if we claimed before knowing what tax credits we would be getting we would probably end up with an over payment and so would be better off waiting.
Once we get the award notice I will be making a claim to see if we can get help.

MrsBartolozzi

Missis_Beki wrote: »

I was told by my local council office to hold off making a claim until tax credits had been sorted, they said if we claimed before knowing what tax credits we would be getting we would probably end up with an over payment and so would be better off waiting.
Once we get the award notice I will be making a claim to see if we can get help.

How long will they backdate the claim? Ours don't backdate at all.
You could be missing out. If you claimed and saved some/most of it then you would be in a position to pay back any overpayment, while not missing out on help with rent/CB.

Murgatroyd21

Tac credit awards are based on the lower of either the previous year or current year income. People get confused because the claim form currently only allows inclusion of the previous year details, and people then have to provide current year details separately.

If your joint income for 2009/10 is less than the joint income for 2010/11, the previous year income will be used to calculate the award. If you advised the current year is likely to be less than the previous year, and provide a figure, the current year figure will be used.

Overpayments caused by wrong income is quite often because people don't realise the effect of changing income details during a year.

Example of a typical scenario -

You had a previous year income of £20000 and the claim is initially based on that. Your circumstances change, i.e. lose your job, so you tell the new circumstances and provide a current year estimate, £6000, because this is what you have earned to date, shown on a P45, and you can't say if you will be back in work in the current year. Your award is then re-calculated using the £6000 figure and payments for tax credits are increased. 2 months later you start a job give the details, then at the end of the tax year your P60 shows a total income of £14000. While it is still less than the previous year, because you reduced your income already and had a new calculation based on that amount, you are now overpaid because your actual income was more than the estimate you provided. Too, the income disregard doesn't apply. If you had either left the income to be based on the previous year figure, or provided a higher amount than you actually earned, say £15000 in this scenario, you would be owed money at the end of the year.

You could also minimise the amount of the overpayment by increasing the current year estimate as soon as you got a new job.

When giving a current year income, you should remember it is an annual award and needs an annual figure as close to what you will get to avoid under or overpayments. Some will deliberately use an underestimated amount as they may need the additional tax credits now, but you will normally have to repay any overpayment.