Yet another tax credit problem! please help

bargain_babe

I have just had my bank statement and realise the tax credit amount I have been paid has gone up, its now £100 a week. I remember the last letter from them saying it would go up.

The trouble is its going on last years wages, when my hubby was made redundant and he only had a job for five months and on my part- time wages. In September I started full time so we will obviously be earning lots more than 2005-2006.

I telephoned the helpline in Sept and was categorically told that we were not to inform them of new wages yet, as they would not change the records unless we earned £25,000 more than last year.

I am starting to panic now as I am well aware how quickly this money adds up and yet I havent saved it (all good intentions of) but it has unfortunately gone. When do I tell them? It will soon be April and I know they need to know by then, but as I say I did phone and they said they wouldnt do anything as "by everyone phoning up and changing wages details, that is how the mess of the tax credits overpayment came about originally". Any advice would be appreciated, thanks.

PS I hate tax credits, had nothing but trouble and wish I never ever claimed! There rant over - on with life, hopefully!

CIS

Unless your wages this yr a re £25K higher than last years, you've got nothing to worry about - the award wont alter on that basis (any other changes in circs may alter it)

bargain_babe

Thanks CIS, but will I end up with a bill for £4,000. next year as thats what I'll probably have been paid over. Try as I might to save it - the money just seems to get spent - i save £150 a month but that won't cover it. Or will they just lower my award (probably to £0) until it is repaid.

Any more info appreciated, thanks.

welshcakes

bargain - why not just add a satellite savings account to your current account and set it up so that a certain amount is automatically transferred every month? That way when you do have to pay back next year, you won't feel the pinch. Hey, with any luck you might owe less than you've budgeted for and have a nice little sum for a hols or xmas etc!

System

As CIS said unless your income increases by over £25000 you won't have an overpayment at the end of the year. However you need to contact them asap at the beginning of the new tax year (6 April 2007) and let them know what your actual income for 06/07 was so that they can then amend your award. They will use your 06/07 income as an estimate for your 07/08 income and your payments will reduce.

If you haven't received your P60 by that stage and you both haven't changed jobs too much then your end of March payslips should give a good indicator of what your 06/07 income was.

If you don't do that then from 6 April 2007 they will send you provisional payments based on the details they hold at that time and will only change them when they receive your Annual Declaration .

A huge number of overpayments are caused by people who have had significant income increases either not returning the declaration or leaving it to the last minute to return it and so by the time they do send it in and their details are amended they will already have received too much money.

msmicawber

Are you all sure about the figures you're using? I thought the relevant annual increase amount was £2,500, not £25,000.

kelloggs36

It was increased last year or the year before because of the huge numbers of cases which were affected by the smaller increase in earnings, so to cut back on this work, they increased the threshold to 25k.

raq

They overpaid us 2 years ago and it's only this coming April we will be fair and square. It's been really hard when they have been taking nearly all of it from you. Roll on April.

System

It was increased to £25000 this year to try to cut back on the number of overpayment disputes and appeals taking up so much of the TCO's time. Plus the government promised to get rid of a huge number of civil servants since so much of society blame them for everything that goes wrong rather than the government which changes it's working practices every 5 minutes. So doing this means they can meet their redundancy targets whilst allowing a large number of claimants to keep taxpayers money they aren't really entitled to.

Sorry got off the point - rant over!

msmicawber

I'm sorry to be thick, but if a claimant's Tax Credits were based on the previous year's income of, say, £11,000 and during the current tax year they changed jobs so that their income during the current tax year increases to, say, £14,000 then, because that's below the £25,000 threshhold, would they continue to get the same Tax Credits and not have to pay anything back?

highland

yup even if it went up to £33,000 it would still not result in an overpayment as it's within the £25,000 threshold