Tax credits - will I have an overpayment?

DanE2010

Bradbrown what was your income last year? if it was still within the income bands shown on your renewal form then that is what your award is being based on and you wont be overpaid - the whole point of an auto renewal is that your entitlement wont change as long as your py income has stayed within the bands shown on the renewal form.
All tax credit awards are based on your previous year income unless your current year estimate is lower of 25k higher, your entitled to the basic £545 of ctc based on your py income but when April 6th hits you will no longer be entitled as your current yr estimate is above the new threshold of £40,000 so dont worry you have done everything correctly and you wont be overpaid. Forget about the 25k disregard is this instance as all it does is confuse you further when it doesnt even come into play in your circumstances, bottom line is your not going to be overpaid as long as your previous year income is still within the bandings shown on your renewal form - which im guessing they were else you wouldnt of had the claim auto renewed you would of had to ring up to tell them the income had gone outside the bandings.
You have actually made sure you dont get overpaid at the start of the new tax year by updating your current year estimate which the computer will use to base of provisional 11/12 award on.

Bradbrown

But how do they know that I'm within the 25k disregard if they don't know my actual income?

They only know my income is less than 50k - not the actual figure.

flea72

you will not have an overpayment, as you confirmed your income in April 2010 - although you revised this figure in december, you were actually under no obligation to do this, and this is why you are still entitled to the same amount of tax credits (it was also over half way through the tax year, and amending payments just causes too much paperwork, to recoup such little money)

tbh, when you earn over £30k the disregard isnt necessary, because as soon as you allow for the £25k increase, you are over the maximum levels for entitlement

however although £545 is basic rate tax credits, there is actually a low rate tax credit of £210 that is payable on incomes up to £55k

you have nothing to worry about. the money is yours, spend it wisely lol

F

flea72

Bradbrown wrote: »

But how do they know that I'm within the 25k disregard if they don't know my actual income?

They only know my income is less than 50k - not the actual figure.

if when you set up your claim for tax credits your income was over £25k (number of kids makes a slight change here), then as long as you are still earning that, or more over the following years, the £25k disregard will always take you over the max entitlement

so all you have to confirm is that since you first claimed, you havent earnt over £50k

obviously if your income dropped, then you would want to inform them, as your entitlement would increase, but other than this, they dont need to know actual income

F

Bradbrown

Ah, I see what you mean!!

Bradbrown

flea72 wrote: »

if when you set up your claim for tax credits your income was over £25k (number of kids makes a slight change here), then as long as you are still earning that, or more over the following years, the £25k disregard will always take you over the max entitlement

so all you have to confirm is that since you first claimed, you havent earnt over £50k

obviously if your income dropped, then you would want to inform them, as your entitlement would increase, but other than this, they dont need to know actual income

F

But if you are earning 25k the 25k income disregard only takes you to 50k - you can get tax credits up to 58k

Bradbrown

Another thing - does the fact the income disregard changes to 10k in April make any difference?

flea72

Bradbrown wrote: »

But if you are earning 25k the 25k income disregard only takes you to 50k - you can get tax credits up to 58k

tbh, i dont know of anyone who goes from earning £25k to over £50k without there also being a change of circumstances

change of circumstances, means you have to inform tax credits of your revised situation, so new figures would have to be given

but to ease the pedantic, if someone suddenly went from a household income of £25k to £58k, do you really think they would worry about a possible maximum overpayment of £210/yr, and also think that HMRC would give two hoots that they didnt inform them?

the £25k disregard was chosen as a nice round figure near to the national average wage. it was so people could go from unemployment to working f/t, or for couples where the women took time off from work to have kids, without HMRC having to do endless paperwork, everytime someone changed jobs or did a few hours overtime (as was the case in the early days of tax credits)

in reality, very few people would be earning £25k on 1st april when they signed their declaration, and then suddenly be earning over double that within 6m, its not how the job market usually works - yes there are exceptions to the rules, but on the whole no-one needs to even consider those eventualities, and if they did, as ive said before, i doubt the repercussions would give them any loss of sleep

F

flea72

Bradbrown wrote: »

Another thing - does the fact the income disregard changes to 10k in April make any difference?

it only makes a change from april onwards

F

zagfles

Bradbrown wrote: »

Another thing - does the fact the income disregard changes to 10k in April make any difference?

That will only affect next tax year's award when you'll get nothing anyway.

This year, assuming that last year's income (2009/10) was less than £50k, AND this year's is less than £75k, you ARE entitled to the basic family element (£545 a year).