Tax credits underpayment?

Person_one

I've just received my tax credit award, I work for NMW but get a little extra in unsociable hours pay when I work nights and some weekends.

When I was estimating my income I gave HMRC the figures for if I worked every weekend and the max number of nights each month, so its almost certainly an overestimate but I didn't want to be overpaid and end up owing them money in April!

What I'm wondering is, when I get my P60 at the end of the year, if my earnings are lower than my estimate is there any way to get a 'top up' or a backdating of tax credits to match my actual earnings rather than my overestimate?

I'll give them a ring tomorrow but if anyone on here knows that'd be great, I'm just a bit inpatient!

Thanks.

no-oneknowsme

If , when your renewal is done there has been an underpayment of your tax credits you will receive the underpayment back !

I agree that you were better to under estimate rather than over estimate , no-one needs HMRC chasing them for an over payment.

But dont worry , if your actual earnings work out lower that your estimated earnings , you will get the difference back.

Renewals begin to be sent out around 6th April each year although it can take some time for tax credits to issue the forms to everyone so its not unusual for some people to be receiving them in May/June time. Once you fill in the forms (or you can renew over the phone if you can get through) it takes round 3 weeks for your claim to be finalised and any money owing to you repaid.

no-oneknowsme

Sorry i forgot to add that you can at any point telephone tax credits and give them a more accurate estimate in which case your payments between now and renewal time will be adjsted meaning your weekly payments would increase.

zagfles

Note also that if you end up earning less than you estimated it won't necessarily increase your award, if your income last year was less.

For example if your income was £10k last year and you estimated £15k this year, your current award will be based on £10k because of the income disregard. So if you actually end up earning £12k this year it won't make any difference.

But if you end up earning £8k then your award this year will increase.

Person_one

Ok, this is all a bit confusing, so can I just tell you the numbers and you let me know what you think might happen? Thank you!

For tax year 2009/10 I was employed and earning well over the threshold.

Tax year 2010/11 I was unemployed for four months and for the remaining 8 will be earning minimum wage plus those shift allowances so my earnings for the full year are apparently under the threshold.

If they ask me to estimate my income for 2011/12 then it will be higher than for this year and probably just slightly over the threshold again.

So will I get no award for 2011/12 but a payment to make up for the over estimate of this year?

Disregards and working things out based on previous circumstances really confuses me for some reason, I;m not normally this dense!

Person_one

Anyone please!

zagfles

No, your award is based on the lower of current year and previous year earnings, unless current year earnings exceed previous year earnings by more than the disregard in which case it's based on current year minus the disregard. Sorry if that's unclear but I can't think of an easier way to explain it (and it's one of Gordon's less complicated creations!)

The disregard this year is £25k but next year it's going down to £10k.

I think it's being cut more after that and there'll be a disregard in income rises introduced too. But it'll soon be replaced by the new universal credit anyway.

Person_one

zagfles wrote: »

No, your award is based on the lower of current year and previous year earnings, unless current year earnings exceed previous year earnings by more than the disregard in which case it's based on current year minus the disregard. Sorry if that's unclear but I can't think of an easier way to explain it (and it's one of Gordon's less complicated creations!)

The disregard this year is £25k but next year it's going down to £10k.

I think it's being cut more after that and there'll be a disregard in income rises introduced too. But it'll soon be replaced by the new universal credit anyway.

Thank you, if I'd seen it put like that somewhere before now I would have understood perfectly! Very succinct and much appreciated.