£42000 income new limit for tax credits?

brummiebabe

Just to update - have spoken to Tax Credits and the limit is definitely £40000 and NOT £42000!! Apparently the recent letter was in error & everyone will get a new letter. The £42000 refers to Child Benefit & not Child Tax Credit!!!! So we won't be entitled to it from April...but they can't stop the payments until the renewal pack etc is completed & finalised!! Means I've got to do a big rework of my budget & keep the CTC to one side because I'm probably going to have to pay it back!:eek:

So beware everyone....it is definite that if you had a combined household income of £40000 or over for the tax year 2010/2011 - you are unlikely to get anything. I was told that there are very few exclusions to this!!!

zagfles

brummiebabe wrote: »

Just to update - have spoken to Tax Credits and the limit is definitely £40000 and NOT £42000!! Apparently the recent letter was in error & everyone will get a new letter. The £42000 refers to Child Benefit & not Child Tax Credit!!!! So we won't be entitled to it from April...but they can't stop the payments until the renewal pack etc is completed & finalised!! Means I've got to do a big rework of my budget & keep the CTC to one side because I'm probably going to have to pay it back!:eek:

So beware everyone....it is definite that if you had a combined household income of £40000 or over for the tax year 2010/2011 - you are unlikely to get anything. I was told that there are very few exclusions to this!!!

No this is not right. There seems to be some TCO staff who don't know what they're talking about. I'll try to explain...

£40,000 is not an income limit. It is the point at which the family element of CTC usually starts being withdrawn. It's what is referred to as the "second income threshold" in the rates:
http://www.hmrc.gov.uk/rates/taxcredits.htm

If you earn exactly £40,000 you will still get the family element in full ie £545 a year. If you earn over £40,000 then it will be withdrawn at 41%, so you will lose it all at £41329.

The above applies to the usual case where the rest of tax credits have been tapered away at £40,000. But for families with large entitlements (over 14313 before income taper) eg 4+ kids, 2 kids & childcare, disability etc, then the rest of tax credits haven't been tapered away to zero at £40,000. In this case the family element is just added to the rest of tax credits and is tapered when the rest has gone.

I,_Brian

Oh, great. Can't find any copy of my letter, but HMRC sent one today saying we owe £4 in overpayments from 5 years ago when I was a sole trader, and they wouldn't accept my verbal estimate!

z1985m

how on earth can a household income of 42k claim child tax credits!?

my fiance brings home around 18k - 19k and i DID (just been made redundant) bring home just 5k a year. and i only get £40 a month child tax credits! i have no idea how much i'll get now that i have no job but my guess is not very much!

dreavi

Gawd all this sounds like a nightmare, makes me happy my girlfriend has decided not to have kids. Cant imagine trying to wrap my head around al these combos of Tax credits and child credits and Maternity Pay etc etc. Ugh

melly1980

zagfles wrote: »

This is not an income limit. The letter probably says for most people, but large families, ones with disabilities and ones with high childcare costs could still get tax credits on higher incomes.

Do you have that copied and pasted somewhere :rotfl:

you seem to have to use it a lot on here. Perhaps a banner at the top of the forums stating it would be good and save you some effort.

melly1980

z1985m wrote: »

how on earth can a household income of 42k claim child tax credits!?

my fiance brings home around 18k - 19k and i DID (just been made redundant) bring home just 5k a year. and i only get £40 a month child tax credits! i have no idea how much i'll get now that i have no job but my guess is not very much!

Because if they have 3 kids and every kid goes to nursery (that allows them to go to work) then they will get tax credits. Tax credits are based on number of kids and childcare costs.

Your salary is only used to taper it down. My tax credits are based on houshold income of ~40K, however we have 4 kids. So first they work our what you would get if you earned sod all. 4 kids x 2550 per kid plus the working tax credit elements / family elements would be a total award of something like 13 - 14K per year. They then take 40p per pound off us for every pound we earn more than £6000 (or something like that). So they "give me" 14K then reduce that award by 12.5 - 13K leaving me with roughly 100 quid per month. The above is very approximate and for illustration only.

zagfles

melly1980 wrote: »

Do you have that copied and pasted somewhere :rotfl:

you seem to have to use it a lot on here. Perhaps a banner at the top of the forums stating it would be good and save you some effort.

I do seem to have to say the same thing over and over again on this forum, but then I'm used to it as I have kids:rotfl:...