Tax Credits 2011 - new thresholds query....

lisssa

Hi Hope someone can help me.

Ive just been looking on the HMRC website, and realised the rules surrounding the changes to the Child Tax Credit Thresholds may affect me come April.

my situation is - single parent - current basic salary £36,500.
In my role there is also the potential to earn a one off bonus each year, but this is by no ways guarenteed and they are harder and harder to get. You dont find out if you are going to get one or the amount until February each year. This year ive been really lucky and been awarded a bonus of £4900 - taking my yearly earnings to 41,400.

My yearly salary has also been increased to £38,000 with effect from April this year.

I believe the threshold is now changing in regards to Tax Credits to anyone earning over £40,000 is not eligible for Tax Credits, therefore based on the figures above including my bonus I will not be eligible.

However, there is a good chance that next year, I wont even get a bonus at all, therfore I fall within the threshold and would still be entitled to the £10 a week.

Soooo..... the question is where do I stand, and how should I complete my assessment for Tax Credits when I get the next set of forms which i guess will come through in the next fews months ??

Im not trying to beat the system in anyway but my basic salary is the only thing that is guarenteed , and there honestly is a high chance I wont get a bonus next year??

Also does going over the 40k threshold affect my child allowance pymts in anyway - im not sure if they have changed the rules on this??

Thanks in advance for your help !

Lovelamour

I think if I earned what you do I would give them the worst case scenario i.e. estimate your salary for the year WITH the bonus and then at the end of the tax year tell them your actual salary you may get some back. But surely on your salary you arent entitled to hardly anything anyway??????

Lovelamour

Or if you are paid and you get an overpayment then just pay it back out of your bonus!

zagfles

For a start £40k is not the limit for tax credits next year, it's the point at which the family element starts getting withdrawn if the rest of tax credits have gone by then. If you have 3 or 4 children and high childcare costs you can get tax credits on incomes much higher than 40k.

Having said that it seems you're only getting the family element now so you probably won't be entitled to any next year on an income of 41400.

On your forms you simply declare your income, at 41400 it's likely you'll get a nil award, but if you think your income will be lower next year phone them and tell them after you get your nil award. But if you then end up earning more you'd have to pay it back.

Child benefit is not affected at all and won't be till 2013 at the earliest, when they are planning to remove it from higher rate taxpayers (currently that is income 42.5k+). But it might never happen.

gardenergirl

I've been looking at these new thresholds too and I think hidden in the budget was news that from 2012 anyone earning over £25K (I think) won't get any family element of the child tax credit anyway (or the £10/wk). So I don't think you have to worry about next year at all.

gardenergirl

Having re-checked, it actually reduces when you earn £25K and you will lose it completely if you earn over £30K. I got this info off the this is money website.

zagfles

gardenergirl wrote: »

Having re-checked, it actually reduces when you earn £25K and you will lose it completely if you earn over £30K. I got this info off the this is money website.

Nope - this is rubbish. Might be true for very specific circumstances, like if you have 1 child, no disbilities, work 16 hours etc, but there is no general upper limit in tax credits at all.

You get elements which depend on circumstances (no of kids, disability etc) and they are reduced by a % of income, but as there is no limit to the number of kids so there is no income limit for tax credits!

Someone with 10 disabled kids and £300 a week childcare costs could get tax credits on an income of £200k. So bankers could even be eligible!