I work for Tax Credits

irs101

Fran

That's not quite right, the £2,500 disregard is only for income rises. Falls in income are always taken into account. However if you are the family element only (£545) IR will give you a lower limit above which you don't have to tell them about your reduction in income, as it won't affect your award.

Tania

No you don't both have to work to qualify. But while lower income will be taken into account, even without your wage you are probably on a high enough household income to mean that you will still only get the £545. So unless you've got a reasonable amount of childcare costs or getting a disability element, the chances it will mean no change to you TC award. That said, I would always recommend telling IR what your revised estimate of 04/05 income is, just in case.

irs

Spendless

Tania

No you don't both have to work to qualify. But while lower income will be taken into account, even without your wage you are probably on a high enough household income to mean that you will still only get the £545. So unless you've got a reasonable amount of childcare costs or getting a disability element, the chances it will mean no change to you TC award.

irs

As i have mentioned before once your household income reaches £25,000 you are entitled to £545 p.a regardless of whether you have 1,2 or 3 kids and this remains the same until you reach the higher end of the income bracket where you no longer qualify for CTC.
The exceptions being as stated if there is a disability element or if you have a child under 1 (when there is an extra £545 p.a till the childs first birthday)

I was also under the impression that an income of over £25,000 would not give you any help towards childcare costs unless you can tell me otherwise.

irs101

Spendless

On the whole, that is true. But there is no specific threshold at which nobody gets more than £545 - it's just that as the maths works out at moment, a typical family (three kids or less, no disability, no childcare element) can't get more than the family element once they have an income of £25,000 or more. The table you've refered to previously shows the figures for these typical families.

However there are a significant minority who get more than £545 at higher incomes. And families with substantial amounts of childcare can get help with the costs to much higher income levels - up to £42,500-ish for a family with 2 kids and childcare costs of £200pw.

irs

Lozz

Income disregard is a key part of the policy, so you will be benefiting from it.

First thing, the IR person is right that you were under no obligation to tell them your true income at that point in time. You only have to tell them when you complete your annual review in the June-September following the end of the tax year. In fact you can tell them whatever you like in-year. You could have phoned up in April 2003, told them that you are expecting to get a massive pay cut, get a huge tax credit award and then pay it back in installments out of this years award. Sort of like an interest-free loan - but I digress.

You've got to remember that it is normally the overall increase in income this year compared to last year less £2,500  multiplied by 37%. But for the first year of the new tax credits (last year) it was the increase compared to your income two years ago. This could be what is happening - last year they were taking into account a much bigger income rise than you realise, because it was two years worth of income rises. This year, that won't be the case. Perhaps it'll be clearer if I give an example.

Jan 2003 - you apply for TCs using 2001/02 income of £10K. But in fact you have already had a pay rise this year of £1,500. Your initial award is still based on £10K though.

April 2003 - tax credits begin. You get an income rise of £2,200. You only have £1,000 of your income disregard left for 03/04, so you lose £1,200 x 37% = £444 or £34 off your 4-weekly award.

October 2003 - you get another income rise of £500. Your total income for this year is now £10K + £1.5K +£2.2K + £0.5K = £14,200. You've used up your income disregard so you lose £500 x 37% = £185. However, because you lose this amount from your annual award, but you are half-way through the year, you'll lose £28.50 off your 4-weekly award.

April 2004 - your award is renewed, but is now based on your previous year income of £14,200, so your award may be lower again.

July 2004 - you get a pay rise of £2,000 - but no change to your award because you get a new income disregard for this year.

October 2004 - you get another income rise of £2,000, you lose £1,500 x 37% = £555

I could go on forever, but hopefully you get the idea.

Other things could be triggering changes to your award other than income changes - child leaving education, baby turning one year old?? You didn't happen to be one of the ones who got interim payments from your local tax office when TCs started did you? That had some very strange effects indeed on people's award!!

So as for this year, if you have had no other pay rises since last year then your husband's current pay rise should not change this years award. But if you have any further income rise this year, they will affect the amount you get. So don't worry for now - but keep reporting the income rises. You'll end up with mulitple award notices, but it'll keep you on track and make sure any amounts you owe IR are small. Your husband's pay rise will be taken into account from April next year.

Hi Irs, Thanks for the explanation, I'm a lot clearer now on how it all works. Maybe they adjusted my payments last year because the carers allowance wasn't a pay rise, it was a new income for me even though it was below the £2,500 disregard. I've told them so I'm just going to put the remaining payments into savings and see what happens in April.

Lozz x

irs101

Sorry, I was using pay rise and income rise interchangibly. However it is entirely possible that there may be a specific rule in the regulations relating to CA - I don't know a lot about the details of the income regs I'm afraid.

Saving the money is very sensible if you are at all unsure and you can afford to do it. However, if you keep all your award notices and the details of the calls where you have questioned the amount, if it did turn out that they have got it wrong (and I really doubt they have in this case) you would have strong case to appeal to get the overpayment written off.

irs

Lozz

I'll be happier saving the money just in case they want it back, however interestingly, after your advice I had a look at all of my award notices, last year under "changes in income" it said to "tell us about any changes in income", on this year's notices it says "tell us if your income will be more than £xxx" which is £2,500 more than the award is based on and £15 more than we will be getting, so it's looking very promising Thanks again for your help.

Lozz x

panicos_2

Hi all
I have just given up fulltime work to look after my son he gets DLA middle rate and lower rate mobility. I am going to be working 5 hours a week instead of 35. I am hoping to get carers allowance, do I tell tax credits now about my changes or do I wait till I get Carers allowance? My husband works he gets about £16500 a year any advice anyone? thanks in advance. Oh I have three children

Ted_Hutchinson

Details of Carer's Allowance here

As you mention you will soon be working only 5 hrs a week I presume you are aware that you must not earn above £79 a week after certain deductions outlined at the above link.

You may not be aware of the rather complicated rules which the Carer's Unit apply very strictly regarding your previous employment particularly if you are paid monthly. They unfortuately average the earnings and apply it to a point in the week/month before the Carer's Allowance start date. someone such as a school ancillary helper might physically end work in July but have an end of contract date of 31 August. and if the average earings after deductions are 1p over the limit (after deductions) they will make you wait a further month before coughing up the CA.

They are in my opinion applying the law incorrectly as it is supposed not to apply to those who are not employed earners when they claim CA. In this case of continuing employment but at a lower rate, they may well be able to get away with it, so you do need to be prepared to wait for the CA to start after your previous wages average below the threshold in the week/month before the claim.

I would leave notifying the tax credit folk till after it's happened and you have the new hours/carer's allowance in place.

Doomcaster

Hi Tax Credit, I have been on the application form thingie, to see if I am entitled to andy working tax credit, I live alone, a home owner and earn 14,350, pay full for dentist prescriptions and everything! When I input my information it says yes I am entitled and then gives a figure of 0, can you help please, thanks

I remembered something, if you cannot claim tax credits and are on a low income you can fill in form HC1:

https://www.ssani.gov.uk/forms_leaflets/forms/hc1.pdf

http://www.ppa.org.uk/ppa/HC1_form_intro.htm

and you may get help with NHS costs (the exemption certificate), I have no idea what they consider low income is but the leaflet does talk about savings limits, I would call them but I wouldn't qualify anyway, hope this helps someone!

charliedavis

Hi,

I would just like to warn everyone that I used https://www.entitledto.org yesterday and today, worked out from April 2005 I will be entitled to around £6000 p.a. in Tax credits - later that same day I rang the IR to inform them of a change in childcare costs (upwards - now £150 per week), and double checked these amounts. The man I spoke to was horrified at the fact the system was telling me I would get so much, apparently as I will be earning over £15000 I am not entitled to a penny WTC, only CTC. He asked me to ring back the next day when the system was working again. How many people are using the website and believing what it is telling them?

It is crazy, I am a new teacher, just started work in September so my income is only calculated from Sep to April - so £12000 - I am entitled to £8486 in CTC and WTC including childcare help. In April I will get only £2500 when my income is calculated over a full year - I lose practically POUND for POUND what I am gaining by this increase in income! WHAT WAS THE POINT IN ME QUALIFYING AS A TEACHER AND SPENDING 4 YEARS OF MY LIFE doing so to receive a kick in the teeth like this? Why bother to get a fairly well paid job when I can drop down to part-time and be BETTER off that now!

Anyone that can shed any light on this would be greatfully appreciated! Who is right? What's going on! ??? (By the way I have 2 children, only 1 in childcare at £150 per week and I'm a single parent)