Tax credits - will I have an overpayment?

Sixer

I don't think you will have to repay:

"Example 2: Sian is employed as a nursery nurse. Her tax credit award for 2006/07 is based on her earnings of £15,640 in 2005/06. In August 2006 she is promoted and gets an extra £500 a month. She contacts us to tell us her income has increased, and she estimates her annual income for 2006/07 will be £19,640. The difference of £4,000 between her 2006/07 income and her 2005/06 income is less than the £25,000 disregard so her current award is not affected, but the information is recorded and her run-on payments from April 2007 will be based on income of £19,640."

http://www.hmrc.gov.uk/manuals/ccmmanual/ccm1135.htm

This seems to fit your situation, OP.

Bradbrown

I don't really know if it does as I never gave them my actual earnings.

All they know is my earnings were under 50,000 during the automatic renewal process.

If I had given them my actual earnings than I think I would be ok.

no-oneknowsme

Sixer - the OP gave tco an estimate of household income so the disregard does not come into play here.

Bradbrown

I think you are right - the estimation given in December for this years earnings means the disregard no longer applies - I just can't figure why they don't just stop the payments and let me pay back now what I owe.

Is it in case I change the estimate again?

bestpud

I'm not sure how it works for automatic renewals but estimatingba higher income mid year would not normally affect the disregard.

I imagine your award is the same as those who renew every year and you will be fine because it is based on your actual income for last year.

I really don't think you have anything to worry about. I'm almost certain your award will just stop in April and the disregard covers you for this year.

Bradbrown

But how would they apply the disregard if they don't know my actual earnings from tax year 2009-2010?

I still think I wil have to pay this years cash back due to me informing "in year" of my income rise

bestpud

Bradbrown wrote: »

But how would they apply the disregard if they don't know my actual earnings from tax year 2009-2010?

I still think I wil have to pay this years cash back due to me informing "in year" of my income rise

They know it is less than £50k because you'd have had to tell them if it wasn't and so this years award is based on your actual income for last year - which was less than the cut off figure. Tax credits are always based on last years income unless you tell them otherwise.

If you had called them in April and said your income was going to be a lot less this year, and they'd increased your award to reflect that, then you would definitely now have an overpayment. You haven't done that though, so I am sure you will be fine.

If you are very worried about it, then just put it to one side and you will either have it to repay, or a little bonus if you don't have to.

The only part I am not sure about is whether the disregard applies if your income takes you above the threshold altogether, but I can't see how it doesn't tbh.

Bradbrown

I asked them if the disregard came into play if you went over the threshold and to be honest the girl on the phone didn't seem to know.

Sixer

no-oneknowsme wrote: »

Sixer - the OP gave tco an estimate of household income so the disregard does not come into play here.

I see what you are saying, but I still think it's wrong, sorry!

The OP presumably gave accurate earnings in the first year they claimed TCs. After that, they were on auto-renewals (which aren't estimates). The only estimate they have given is the estimate of extra earnings by telephone in December. That exact situation is covered by the HMRC guidance note I pasted.

I guess the OP is going to have to confirm by telephone as there are conflicting opinions here, but I really can't see that they're going to have to repay any money.

Bradbrown

As i said, I've asked and no-one at the TC helpline seems to know.