Letter from HMRC Re Disabled Tax Credits

Kazipoo

I have seen other posts on this, but mine is ever so slightly different and I don't know how it will affect anything, since I can't get through to them I thought I'd pick your brains.....

Around 6 years ago the hubby went back to work after a long period of illness, he was medically discharged from the army and has three fractures in his back, the fluid missing from some of the pockets in his lower back, his pelvis is tilted, one leg is shorter than the other, he has suffered from 3 DVT PE's and has just been diagnosed with rheumatoid athritis in his shoulders and hands. When he first went back to work, they put him on disability tax credits. Despite all of his problems, and he does suffer on a daily basis, he works 5 1/2 days pers week. The following year we were asked by tax credits if his health was still the same, we said there had been no change, tax credits then asked for permission to contact the doctor, we gave permission. This has been the same every year. They have never asked us about any other benefits (he receives a war pension and an army disablement pension), however, today I received a letter asking us why we think he is still disabled.

Now he doesn't quite fit into any category. So, I took the award out, and noticed that the disability element seems to only be awarded on the working tax side and not the child tax side.... thing is, we have never been eligible for working tax credits, or if we did, it was for the first year only, since then, his wages have been too high.

So my question is, do I explain this to them or do you think they will find a way of making us pay back something which we never received in the first place?

For information purposes, this years working tax element looks like this:

Basic £1923.55
2nd Adult £1890.70
30 hour element £ 792.05
disability element £2573.25

Total elements £7179.55
reduction due to income £7179.55

Amount for period £ 0.00

DX2

Kazipoo wrote: »

So, I took the award out, and noticed that the disability element seems to only be awarded on the working tax side and not the child tax side.... thing is, we have never been eligible for working tax credits, or if we did, it was for the first year only, since then, his wages have been too high.

It wouldn't be awarded on the child tax side as it is your husband who is disabled not your children.

I'm assuming that you didn't check your award every year when it got renewed?

Kazipoo

DX2 wrote: »

It wouldn't be awarded on the child tax side as it is your husband who is disabled not your children.

I'm assuming that you didn't check your award every year when it got renewed?

I have always done the renewal over the phone, answered all the questions they have asked, but like I say, we have never been entitled to working tax credit anyway, so should this make a difference?

Murgatroyd21

You normally only qualify for a disability element if you work. It makes a difference as all elements are in effect stacked up and reduced in a certain order by the amount of income you have. If the disability element wasn't included, it would mean a further £2573.25 to be taken from the child tax credit element as they work down through the wtc elements first, then childcare, children elements, until they get finally to the family element of £545 which is not reduced at present until income is over £50000.

In effect, if his health is still the same explain and continue to get the element awarded.

Kazipoo

Murgatroyd21 wrote: »

You normally only qualify for a disability element if you work. It makes a difference as all elements are in effect stacked up and reduced in a certain order by the amount of income you have. If the disability element wasn't included, it would mean a further £2573.25 to be taken from the child tax credit element as they work down through the wtc elements first, then childcare, children elements, until they get finally to the family element of £545 which is not reduced at present until income is over £50000.

In effect, if his health is still the same explain and continue to get the element awarded.

His health is probably worse rather than the same, but they are very specific in the letter they sent about what they would accept as a disability and it doesn't cover his specific disability, for example it states as being disabled "cannot without difficulty, put either hand to their head as if putting on a hat", he cannot at all with the one arm because of the rheumatoid arthritis, however he is somewhat more capable with the other arm, meaning he can swing it up.

They don't take things like backs into consideration for some reason.... anyway, whether they class him as disabled or not is by the by, what I am really wanting to know is if they do decide he is not disabled, can they make us pay back any allowance even though we have never received it because he earns too much?

Murgatroyd21

Ok, if you accept you weren't entitled to it they may claim it back. You say you didn't receive it, but you did. As I said above, imagine 2 columns, the left hand is made up from the elements you are entitled to, the right from the amount of reductions to be made due to income.

If the total in the left hand column was (for arguments sake) £10000 and the amount in the right hand column is £9000, you have £1000 left to divide over the year (it would probably show as some form of child tax credit entitlement).

Now, imagine the entitlement column on the left was reduced by the amount of the disability element, your reductions column would now be higher than the entitlement column and no tax credits to get. You would have been overpaid by £1000 each year in this example (just very rough guide for explanatory purposes).

Kazipoo

Murgatroyd21 wrote: »

Ok, if you accept you weren't entitled to it they may claim it back. You say you didn't receive it, but you did. As I said above, imagine 2 columns, the left hand is made up from the elements you are entitled to, the right from the amount of reductions to be made due to income.

If the total in the left hand column was (for arguments sake) £10000 and the amount in the right hand column is £9000, you have £1000 left to divide over the year (it would probably show as some form of child tax credit entitlement).

Now, imagine the entitlement column on the left was reduced by the amount of the disability element, your reductions column would now be higher than the entitlement column and no tax credits to get. You would have been overpaid by £1000 each year in this example (just very rough guide for explanatory purposes).

Thats what I don't understand though, if the reductions made were the same as the amount awarded, surely we were never paid anything other than what we should have got for the kids anyway?

Or are you saying they reduce it by less because he has been claiming for the disabled element? Are you saying that because he is disabled he is entitled to earn more before they reduce?

So the average Jo might be entitled to (for example) £7.5k and we might be entitled to £10k? Meaning that essentially we have been allowed to bring an additional £2.5k more than the average family before being penalised?? Am I getting this right or am I getting even more mixed up? If that is indeed the case, how the blinkin heck can I find out just how much he may have been entitled to, or am I at the mercy of a government who have made it clear they want to reduce debt by any means?

Kazipoo

And for the record, I do believe that he is entitled to it, I just don't agree with the fact that I can be penalised for the tax credits department not doing their jobs correctly. I correctly answered all questions regarding his disability and gave full permissions for his medical records to be scrutinised, we are not trying to screw anyone over, just claiming what we believed we are/were entitled to.

Indie_Kid

http://www.hmrc.gov.uk/taxcredits/tc956.pdf does he meet any of the conditions from condition 2? That link tells you the criteria.

System

To be entitled to have the disability element of WTC included in your claim your husband has to fulfill certain criteria.

On pages 3, 22, 23 and 24 of the guidance notes of for the tax credit application - http://www.hmrc.gov.uk/forms/tc600-notes.pdf
it goes into detail about that criteria.

Although you may not be receiving WTC that does not mean your husbands disability has not been taken into consideration in determining your award.

TCO decide which elements of WTC and CTC claimants are entitled to have taken into consideration and then cut it down depending on your income.

If you imagine a tower built up of all the elements you are entitled to like-


CTC family element
CTC child element
WTC disabled element
WTC 30 hour element
WTC 2nd adult element
WTC basic element

TCO then use your total income to chop it away from the bottom, tapering out first the basic element followed by the 2nd adult element and upwards. If you don't have the disabled element of WTC then obviously your income would chop into more of the child element and family element and reduce your actual entitlement even more.

HTH

Murgatroyd21

The total entitlement is made up of all the elements. That total is dependant on what elements you qualified for. Imagine them labelled as A, B, C, D, where A is the disability element, B is the working tax element, C is the child element and D is the basic family element. Added together they come to £10000.

Now imagine you have to make a reduction to your entitlement based on the level of income. The total of that reduction is £9000, but you have to take it away from the elements in the order of A first, then B, then C, then D.

In this case You start with A, worth £2500 from £9000 = £6500 reduction still to be made.
Then take B, worth £2355 from £6500 = £4145
Then C, worth £4600 is more than still to be reduced so take £4145 from £4600 = £455 left having met all the reductions, and add D, worth £545 to this to give £1000 entitlement left after reductions.

If you didn't have entitlement to the Disability element A, the reductions would have started being made at element B until there was no entitlement left at all. It's the order reductions are made, not whether they show as a remaining payable element on the award notice.

Hope this helps.