Child Tax Credits help!

cannydo

Hi, hope someone can help.

I had told tax credits that our income would probably be the same as the year before which was me £10000 and hubby £12000, joint total £22000.

But hubby has had loads of overtime and extra shifts this year resulting in his income being £20000 and mine £11000, this would mean we have a total of £9000 i never declared.

Will we need to pay anything back?

And when I do declare this through my renewal pack, will this effect our next tax credits award, because my husband may not get this overtime again.

zam121

well it will just reduce your tax credits for this tax year,but not by much.

allen35

zam121 wrote: »

well it will just reduce your tax credits for this tax year,but not by much.

How did you work that out as HMRC will use £33,000 rather than £20,000 income????


Your 2011/12 award will be based on an income of £33,000 which will greatly reduce your tax credits depending on how many children you have. If you feel that this years income is going to be much less it may be worth giving an estimate of joint income but be aware this may create an overpayment if overtime continues and you underestimate.

Visit entitledto website to calculate your approximate award.

pipscot

cannydo wrote: »

Hi, hope someone can help.

I had told tax credits that our income would probably be the same as the year before which was me £10000 and hubby £12000, joint total £22000.

But hubby has had loads of overtime and extra shifts this year resulting in his income being £20000 and mine £11000, this would mean we have a total of £9000 i never declared.

Will we need to pay anything back?

And when I do declare this through my renewal pack, will this effect our next tax credits award, because my husband may not get this overtime again.

If last year's tax credits were based on the previous year's income (rather than on an estimate provided by yourselves) then you should be covered by the disregard and not have to pay anything back for last year.

This year - when you renew your award, tax credits will be based on the higher income. This will mean your payments will drop when you renew (particularly since the first few payments of this year are likely to have been based on the lower income).

You can either cope with this for the rest of 2011/2012 and wait until the following renewal in May/June 2012 when you will get a lump sum to make up the difference (assuming your income in 2011/2012 is lower than 2010/2011) OR you can ring up and ask for the 2011/2012 tax credits to be based on an estimated income rather than last year's income.

BEWARE: once tax credits are based on your estimates for 2011/2012, the income disregard does not apply and if you underestimate the 2011/2012 income you will get into an overpayment situation. It is usually better to slightly overestimate an income than to underestimate it.

zagfles

pipscot wrote: »

BEWARE: once tax credits are based on your estimates, the income disregard does not apply and if you underestimate this year's income you will get into an overpayment situation. It is usually better to slightly overestimate an income than to underestimate it.

We had this discussion recently. The disregard doesn't apply to the estimate, but it does still apply to the increase over last year's actual.

For instance if the OP's 2009/10 income was £23k, and she gave an estimate of £22k for 2010/11, but actually earned £31k, then there will be an overpayment but only a small one based on the £1k difference between estimate and 09/10 actual. She still gets the disregard for the £8k difference between last year's income and this year's.

pipscot

zagfles wrote: »

We had this discussion recently. The disregard doesn't apply to the estimate, but it does still apply to the increase over last year's actual.

For instance if the OP's 2009/10 income was £23k, and she gave an estimate of £22k for 2010/11, but actually earned £31k, then there will be an overpayment but only a small one based on the £1k difference between estimate and 09/10 actual. She still gets the disregard for the £8k difference between last year's income and this year's.

yes but i was actually talking about the OP giving an estimate for 2011/2012 (i.e. actual income for 2010/2011 was £31K, estimated income for 2011/2012 is e.g. £22K). If the actual 2011/2012 income is higher than the estimated £22K then this will become an overpayment situation.:)

cannydo

Thanks for your replies guys. But now I am dreading receiving my renewal pack.

After reading the replies I have had a good look over the tax credits award paperwork for 2010/2011 and it says "this income is based on an estimate provided by you" which is £21964, and under that is states our total income from the year before 2009/2010 which was £21964. So even although I have based it on 09/10 income, is still says that it is based on an estimate.

I am really confused now, and panicking as I have read lots of horror stories regarding overpayments.

allen35

cannydo wrote: »

Thanks for your replies guys. But now I am dreading receiving my renewal pack.

After reading the replies I have had a good look over the tax credits award paperwork for 2010/2011 and it says "this income is based on an estimate provided by you" which is £21964, and under that is states our total income from the year before 2009/2010 which was £21964. So even although I have based it on 09/10 income, is still says that it is based on an estimate.

I am really confused now, and panicking as I have read lots of horror stories regarding overpayments.

Hi cannydo

No need to worry, your tax credits for this last year 10/11 were fine as they were based on previous years income 09/10. As your income didn't increase by £25,000 there will be no overpayment.

Now that income has risen your new award will be based on your 10/11 joint income of £31,000 which will reduce your tax credits considerably.

As i earlier stated you can, again estimate 11/12 years joint income which will give a higher level of tax credits if you feel this years income will be lower but be aware if you do underestimate you will incur an overpayment which will have to be paid back.