Child tax credits: family element from April 2011

DavidHayton

Looking for some advice,

From April 2011, the income limit for the £545 family element of the child tax credit goes down from £50k to £40k. Does anyone know if this £40k refers to
(a) total gross income for me and my partner
(b) total gross income minus personal pension contributions
(c) total gross income minus personal pension contributions, gift aid payments and anything else that I can set off against tax such as union subs.

If it is (c) then this would be the same as the total income that we declare for income tax. This would make sense but the HMRC website is rather unclear.

Thanks in advance
David

zagfles

DavidHayton wrote: »

Looking for some advice,

From April 2011, the income limit for the £545 family element of the child tax credit goes down from £50k to £40k. Does anyone know if this £40k refers to
(a) total gross income for me and my partner
(b) total gross income minus personal pension contributions
(c) total gross income minus personal pension contributions, gift aid payments and anything else that I can set off against tax such as union subs.

If it is (c) then this would be the same as the total income that we declare for income tax. This would make sense but the HMRC website is rather unclear.

Thanks in advance
David

(c) in general however there are exceptions. Some taxable income can be ignored (such as maternity and first £300 of interest etc) and some non taxable income is counted (eg strike pay).

See http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04000.htm

See form TC825 for personal pension/gift aid dedcutions http://www.hmrc.gov.uk/forms/tc825.pdf

DavidHayton

Thanks zagfles, that's very helpful! Seems that as long as the total joint income that my partner and I declare for tax is less than £40k then we will keep the child tax credit for one more year.

Can't see my union paying any strike pay so I wouldn't need to worry about that!

David

zagfles

DavidHayton wrote: »

Thanks zagfles, that's very helpful! Seems that as long as the total joint income that my partner and I declare for tax is less than £40k then we will keep the child tax credit for one more year.

Can't see my union paying any strike pay so I wouldn't need to worry about that!

David

Are you talking about this year's income or next? Note that even if this year's income is under 40k, you also have to make sure next year's is under 50k otherwise you'll have to pay some/all back. (There's a 10k disregard for income increases).

If next year's is under 40k you'll be entitled regardless of this year's (though if this year's is over 40k you'll have to phone and tell them your expected income next year).

DavidHayton

zagfles wrote: »

Are you talking about this year's income or next? Note that even if this year's income is under 40k, you also have to make sure next year's is under 50k otherwise you'll have to pay some/all back. (There's a 10k disregard for income increases).

If next year's is under 40k you'll be entitled regardless of this year's (though if this year's is over 40k you'll have to phone and tell them your expected income next year).

It's next year's income that I'm talking about. This year's is above £40k but below £50k. I am planning to switch some money from an ISA to a SIPP after April 6 2011 in order to bring our taxable income for 2011/12 below £40k and thus keep hold of the £545 for another year.

Thanks for your help
David