child tax credit from 2011 2012

debtiva

Hi,

I just need someone to clarify the cut off for getting tax credits 2011-2011.
has it now gone down to a family earning no more than £40,000 a year?
Also is it correct that from april 2012 the cut off for getting child tax credit is a couple joint income of £25,000 a year????

We have 6 children, 5 that live with us all under 16.

please can someone let me know

thanks

MrsManda

I don't know the details but the rates and thresholds for tax credits can be found on the HMRC website
http://www.hmrc.gov.uk/rates/taxcredits.htm

debtiva

Hi,

I am not getting to grips with the first income threshold and the second income threshold.

does it mean first and second income put together so my income and husband ???

i am only looking as child tax credit not tax credit

looking at 2011 second threshold is 40,000 and first for child tax credit only is 15,860 is that put together meaning if you earn no more than these two figures put together 55,860 that we will still get child tax credit ???

i really have no idea

am more worried for 2012 when on the news it said threshold would go down to 25,000 is this a joint income ?

debtiva

Also what does the income disregard mean?

zagfles

OK firstly - ignore media !!!!!!!! which talks about a "cut off" for tax credits. Most journalists don't seem to have a clue about tax credits. Cut-off's can be worked out for very specific circumstances by working out when the elements are tapered to zero, but there is NO general income cut-off for tax credits AT ALL. Someone with 10 disabled kids and childcare costs could get tax credits on an income over £200,000 !! (that'll get the ranters ranting! )

To work out your entitlement you first add the elements you are entitled to. If you have kids then you are entitled to the WTC if you work at least 16 hours.

Then apply the income reduction. Income over the "first income threshold" reduces all WTC and CTC by the rate given (39% this year, 41% next). Except the family element (£545), which is retained either till you get to the "second income threshold", or till the rest is gone. WTC is reduced first, then CTC when all WTC is gone.

If you are not entitled to WTC (eg work under 16 hours) then use the "First threshold for those entitled to Child Tax Credit only"

Income used initially when you claim is last tax year's. If your income this year goes up by less than the "disregard" then your claim is still correct, and you don't have to tell them and there'll be no overpayment this year. (But it's best to tell them so your payments next year will start correct).

If your income goes up by more than the disregard then there WILL be an overpayment if you don't tell them straight away.

If your income goes down then you are entitled to more, you can phone and tell them and your payments will go up (providing they believe you) or you can wait till the end of the year and you'll get a lump sum.

Confused??

debtiva

gosh ..................yes still confused. i am not thick honest.

we have never been entiled to wtc only child tax credit..............earning about £36,000 joint income this year was £31,000 last year and did have 6 children living with us but now only have 5.

so is the media not correct then?? the cut off to not get ctc this year is not 40,000 and 2012 not 25,000?

i get the forst bit where we have to add the 2555 for each child x 5 but a bit lost where have to apply the income reduction which for us would be the child tax credit as earn to much for wtc

zagfles

debtiva wrote: »

gosh ..................yes still confused. i am not thick honest.

we have never been entiled to wtc only child tax credit..............earning about £36,000 joint income this year was £31,000 last year and did have 6 children living with us but now only have 5.

so is the media not correct then?? the cut off to not get ctc this year is not 40,000 and 2012 not 25,000?

i get the forst bit where we have to add the 2555 for each child x 5 but a bit lost where have to apply the income reduction which for us would be the child tax credit as earn to much for wtc

When working out what elements you are entitled to forget income. If you are working >16 hours and have kids then you ARE entitled to WTC. You may not actually get any because of your income level BUT the WTC elements are used in the calculation of your CTC amount, as follows....

Assuming you work 30+ hours, 5 kids, no childcare, no disabilities etc, on 36k, your entitlement next year is:

1920+1950+790+2555*5+545 = 17980

Reduced by 41% of income over 6420:

(36000-6420)*0.41 = 12127.80

Makes £5852.20

susiewuzy

Thanks for explaining how all the numbers work, zagles. I do follow what you have done for the OP, but I don't see how to apply it to my figures, as we are over the second income threshold. I would be very grateful if you could advise me, too, please.

I'm guessing that we are one of the families who will lose them altogether.

Husband and I jointly earn 41,7864 and we have just the one child. With no childcare we receive only the family element of £545.... Will this stop in April?

Many thanks.

zagfles

susiewuzy wrote: »

Thanks for explaining how all the numbers work, zagles. I do follow what you have done for the OP, but I don't see how to apply it to my figures, as we are over the second income threshold. I would be very grateful if you could advise me, too, please.

I'm guessing that we are one of the families who will lose them altogether.

Husband and I jointly earn 41,7864 and we have just the one child. With no childcare we receive only the family element of £545.... Will this stop in April?

Many thanks.

Sorry, on an income of 417864 you won't get anything

I assume you mean 41k'ish - you'll be on the borderline. The family element is retained till £40k (or till the rest of CTC is gone if higher) and then it's withdrawn at 41%.

With just one child the rest will be gone well before £40k. So subtract 40,000 from your income and multiply by 0.41. If that's more than 545 then you get nothing. Otherwise subtract it from 545 and that's what you get.

If you're on the borderline it could be worth making additional pension contributions (eg AVCs) to reduce your income below £40k.

susiewuzy

zagfles wrote: »

Sorry, on an income of 417864 you won't get anything

I assume you mean 41k'ish - you'll be on the borderline. The family element is retained till £40k (or till the rest of CTC is gone if higher) and then it's withdrawn at 41%.

With just one child the rest will be gone well before £40k. So subtract 40,000 from your income and multiply by 0.41. If that's more than 545 then you get nothing. Otherwise subtract it from 545 and that's what you get.

If you're on the borderline it could be worth making additional pension contributions (eg AVCs) to reduce your income below £40k.

Thank you for taking the time to explain, zagfles.

(for the benefit of anyone else who's unsure where they stand on this level of income) I work it out for us as: (income) 41786.40 - 400000 = 1786.40 x 0.41 = 732.424 So the figure exceeds the £545, meaning we get nothing.

spaceman5

zagfles wrote: »

When working out what elements you are entitled to forget income. If you are working >16 hours and have kids then you ARE entitled to WTC. You may not actually get any because of your income level BUT the WTC elements are used in the calculation of your CTC amount, as follows....

Assuming you work 30+ hours, 5 kids, no childcare, no disabilities etc, on 36k, your entitlement next year is:

1920+1950+790+2555*5+545 = 17980

Reduced by 41% of income over 6420:

(36000-6420)*0.41 = 12127.80

Makes £5852.20

so going by that, with a household income of £27000 and 3 kids we should be getting £85.50 a week, wonder why we only get £58 per week then:eek: