Another Tax Credits question.

swingaloo

Ive looked at the website but Im still really confused as to how they are asessed.

Son has been claiming tax credits this last year as he has been working for agency on a low wage.

He starts new job on Monday which is permanent and a better wage.:T

Question is, if the amount of tax credits are based on the last tax years income(2010-11) and the following year you are earning more are you not going to be overpaid and end up owing some back at the end of the next tax year(2011-12)?

zagfles

Depends. There's a disregard for income increases, of £10k next year. His tax credits will initially be based on 2010/11 income, and provided 2011/12 income is not more than £10k higher there won't be an overpayment. If it is over £10k higher then he'll need to tell them, and his tax credits will be based on 2011/12 income minus £10k.