Worried about April

loobyloo1980

I just know our Tax Credits are going to be wiped out and it will leave us high and dry.

My partner has got a promotion and his basic is now going to be £16,500 so we won't get any WTC.

CTC will then be slashed from £71.02 per week to a much lower payment also,

plus

we will then lose our free prescriptions :-(

I'm so worried we will struggle once the payments stop as we currently rely on them.

One question someone may be able to answer though - as awards are based on previous year's income, how do you stand if part of that year's income was made up of overtime which is not guaranteed? I mean in April when we sign the declaration all we can be sure of is his £16,500. He may not get any overtime this year, even though in the last one he would have earnt it. Do you tell them you expect your income to be lower than the previous year and then adjust it if overtime start rolling in and it becomes clear that you will go over the ceiling where it will affect your CTC entitlement?

pandas66

Sorry to hear another one has similsr problems getting these tax/child credits. The declaration is made on your end of year salary unfortunatly. Any overtime is included in this, if it becomes apparent your earnings are going to fall below this then you can claim further in the year once your gross salary isn't being earnt. I am in a similar situation, the loophole is that you can contribute towards a pension. This amount is deducted before gross salary. Its only a suggestion, hope it helps.

loobyloo1980

I'm dreading the overpayment bill to be honest. We have gone from 10,716 income 2003/2004 to at least £16,500 now. It is going to be horrendous. We were sailing close to the wind anyway with the overtime - but it was still within the ceiling they give where you need not declare. However, since getting promo last month it is going to make this years income almost £18k by April. It is a very good promo, but it will still dent the pocket until we are used to not getting the TC. Just been on the calculator and £18k would give us just over £300 a year in CTC. I bet all that gets swallowed up in overpayments. Anyway, have been online and declared the income change now we know the damage!!! To be honest, in some ways it will be nice to be rid of the TC but in other ways it will make things hard.

loobyloo1980

pandas66 wrote:

, the loophole is that you can contribute towards a pension. This amount is deducted before gross salary. Its only a suggestion, hope it helps.

Does this apply to company pensions? My partner pays into a company pension you see before tax and NI. So does the TC get calculated on the gross minus the pension?

Becles

You will lose WTC and some CTC, but you will have a much higher salary coming in. Does the increase in salary not cover the tax credit losses?

pandas66

re: last post
I'm having a meeting with our pension adviser tomorroow so I'm going to write down questions to ask, so if theres any you want asking fire away. He's a very clear man so reckon he'll point me in the right direction. I'll post my answers tomorrow.

Spendless

loobyloo1980 wrote:

Just been on the calculator and £18k would give us just over £300 a year in CTC.

Why would you only receive £300 p.a. We are on a lot higher salary and entitled to the family element which is roughly £545 p.a.

Did you use the 'entitleto' website? I think someonw has said that this works in a different way to IR one calculates from the tax year and the other doesn't (tho i can't remember details).

It still might be swallowed by overpayments but perhaps not as bad as you thought?

Re - the perscriptions. Is there a medical condition which means you use a lot of perscriptions? If there is is it worth looking into a pre-payment?.

irs101

On pensions, yes, all pensions count - they should be deducted from your gross income. Incidentally you can also deduct charitable donations - so, if you are on the 1st taper for tax credits, you get 37p back of every £1 you give to charity. Basically the taxable income rules for income tax have been transfered to tax credits. It isn't a loophole, it was a policy decision - although it does rather grate when you see articles in the accountancy journals saying "have you done the end of year tax credit planning for your clients?". Hardly seems the point of the policy.

On websites, I suspect Loobyloo has used the IR site. Basic rule: if you want to know what you would get between now and April if you applied now, use IR. If you want to know what you will get a a full year, use entitledto.

irs

Spendless

I didn't know you could deduct pensions? So how would i do that? I gave details of husbands gross salary plus the amount on his P11D (due to compay car and BUPA) which is worked out for our entitlement

Husband pays so much out of his wages each month into a company pension scheme? Do I just deduct the amount he pays? I should imagine that it will still work out that we only get the family element, but i'd still be interested to know.

loobyloo1980

Spendless wrote:

Why would you only receive £300 p.a. We are on a lot higher salary and entitled to the family element which is roughly £545 p.a.

Did you use the 'entitleto' website? I think someonw has said that this works in a different way to IR one calculates from the tax year and the other doesn't (tho i can't remember details).

It still might be swallowed by overpayments but perhaps not as bad as you thought?

Re - the perscriptions. Is there a medical condition which means you use a lot of perscriptions? If there is is it worth looking into a pre-payment?.

That is what it said on the 'do I qualify' bit of the website. I suppose I will wait and see what my new award notice says before panicking.

Me and my partner are chronic asthmatic and therefore need inhalers every month. I know about the pre-payment thing, but it's still an expense which we haven't had to budget for up to now. Also loss of free sight tests and free dental etc.

loobyloo1980

Becles wrote:

You will lose WTC and some CTC, but you will have a much higher salary coming in. Does the increase in salary not cover the tax credit losses?

No the increase in basic salary per week is not as much as we were receiving in TC. Only when he works overtime, which isn't guaranteed and doesn't help when trying to pay off debts (only supposed to declare definite earnings).