Will we be better off or worse off after changes in April 2011?

SarahLou

I'm a tad confused by all the headlines regarding the changes happening in April 2011. One thing I read says that working families with children are going to be losing out, while others seem to indicate my income tax and possibly even child tax credits may work in my favour. Confused dot com!!

Can anyone shed some light on this for me?

My hubby earns around £17.5k a year while I'm on about £6.5k a year. He works 37.5 hours a week, I work 17.5 hours a week.

We have a 3 and a half year old child.

We don't claim any benefits currently - we get child benefit of course but due to a massive overpayment by the child tax credits people, I'm having to pay off over £1000 that they overpaid me (which I've never worked out HOW - I did appeal but got no where, very annoying as I always tell them of any change within a week and neither hubby nor myself have had any pay increases anyway - I haven't had a cost of living increase for 3 years due to working for a charity so I really cannot work out why HMRC reckon they've overpaid me by so much) - I've had not a penny off them for over 12 months now. When I rang them a few weeks back to check on my "debt", I still had £1000 ish to pay off. The bloke on the phone said that come April, it would depend on how our finances looked as to what we were "entitled to" - if it went up then I'd opt to not receive any payments til the debt was paid off, alternatively, if say it came out that we werent entitled to child tax credits any more then I'd have to then start phyisically paying them money back out of my own pocket (something I would really struggle to do financially).

So my overall question is one that is loaded from a little worry that HMRC might reckon we're no longer entitled to claim any child tax credit at all - yet looking on EntitledTo that shouldn't happen on our wages.

Reading a latest BBC News article:
(http://www.bbc.co.uk/news/business-12321524)
One paragraph reads:

"As a result of these changes, an individual earning £7,475 a year will pay £275 a year less in income tax and National Insurance."

While further down the page it then says:

"The report adds that working couples with children will lose significantly from cuts to tax credits"

Help!?

zagfles

As far as tax credits go you'll probably be the same in April, I guess you just get the family element now (£545) and that will continue. You may be worse off in 2012 as the family element then starts getting withdrawn after the rest (now it's preserved till income gets to 50k, and 40k from April). But your situation/rates may have changed by then.

I assume you don't claim for childcare.

SarahLou

Thank you. No, we don't claim for childcare.

Time will tell I suppose.... I just hope we don't end up much worse off. We struggle now, never mind if things go worse - its one thing having to not receive a penny of "help" from the tax credits (with me having to "pay back" my debt which I have no idea how I ended up with....) but if our payments decline then I'll have to actually be even more out of pocket by actually paying out of my wage to pay back the debt.... if that happens, I honestly don't think we could afford to. Worrying times.