increase in s/e income - when does it affect tc payments

can_i_ask

Hello All,

I am wondering if you could help me - my parents who are both self employed have been recieving maxium tax credits (they are over 50 and no dependants) as their business has been building the years 2010-2011 they showed profit of 6k and the year before was lower, however after the first quarter of this year april-june (and july too!) things really look to be improving for them, so at present they are still receiving maximum tax credits, (based on last years earnings) now should they call tax credits and inform them at present if things continue that their income for the year this year, might be 10-14k? And if they do this will their tax credit payment reduce immediately or will any income changes not effect their payments till next april? And if this is the case, and they continue to get maximum payments will they not actually incur an overpayment?

Any advice would be gratefully received.

CIA xx

no-oneknowsme

can_i_ask wrote: »

Hello All,

I am wondering if you could help me - my parents who are both self employed have been recieving maxium tax credits (they are over 50 and no dependants) as their business has been building the years 2010-2011 they showed profit of 6k and the year before was lower, however after the first quarter of this year april-june (and july too!) things really look to be improving for them, so at present they are still receiving maximum tax credits, (based on last years earnings) now should they call tax credits and inform them at present if things continue that their income for the year this year, might be 10-14k? And if they do this will their tax credit payment reduce immediately or will any income changes not effect their payments till next april? And if this is the case, and they continue to get maximum payments will they not actually incur an overpayment?

Any advice would be gratefully received.

CIA xx

Due to the £10k disregard your parents will not be being over paid THIS year , however , any payments they receive from April 2012 until they renew (in maybe june/july next year) WILL result in an overpayment.

The best thing for your parents to do is to contact the helpline NOW to give them a more accurate note of your parents expected earnings , that way their award will be adjusted now to take the increase in earnings in to account .

This will mean that there will not be any overpayment.

can_i_ask

Thanks for your reply - can I just clarify - if they call TC now and inform of increase in earnings, the payments they get from now till March will stay the same (ie the maximum?) and then payments from April 2012-June 2012 will then be adjusted? My dad is old school and so worried that if they get paid the max from now until march, and then say in April do not even qualify for any tax credits, that the money they already will have had (ie from april 2011-march 2012) will be an overpayment. Can you just put into laymans terms the 10k disregard for me? So if he earnt 6k last year he could earn 16k this year with no overpayment? And his payments for this year would stay the same??

Sorry if I sound dense, but if they know what they will be getting it will help them budget going forward. Thanks so much for your time

can_i_ask

small bump

Hammyman

No, the payments will change. I typically update tax credits around October if it looks like being out by more than a couple of grand.

no-oneknowsme

can_i_ask wrote: »

Thanks for your reply - can I just clarify - if they call TC now and inform of increase in earnings, the payments they get from now till March will stay the same (ie the maximum?)

No , if your parents call tax credit office NOW with the info of their income increase their payments will reduce from NOW to take this into account.


.

Can you just put into laymans terms the 10k disregard for me? ??

The £10k disregard means that your parents would be able to earn £10k more THIS year without it affecting payments this year. However , come April next year when they go to renew , any payments they have received between 6th April 2012 and their actual renewal going through (in say june time) will be accruing an overpayment. I always say that it is better to tell tco of changes as they actually happen , then you know that the amounts you are receiving are accurate.

Sorry if I sound dense, but if they know what they will be getting it will help them budget going forward. Thanks so much for your time

No probs at all.