Don't understand tax credits

sweetbutternut

I really can't understand my tax credits award sheet. Could someone please assist? Thanks!!

Out household income for the year 6 April 2010 to 5 April 2011 was £8500.

Are the tax credits and working tax credits that are being paid into my bank account at the moment based on this 2010 to 2011 income figure? Or are the payments I am currently getting based on my estimated income for April 2011 t0 April 2012?

I'm worried because hubby's got a new job which means a big jump in income for April 2011 to April 2012. They have asked us to tell us our income for 2011 to 2012 - but how can we provide that information when the year isn't over yet? The job is precarious and might end at any time!

Would be grateful if anyone could explain - very worried we're getting overpayments so we're not even spending the money we're getting which is REALLY hard on us at the moment.

zagfles

sweetbutternut wrote: »

I really can't understand my tax credits award sheet. Could someone please assist? Thanks!!

Out household income for the year 6 April 2010 to 5 April 2011 was £8500.

Are the tax credits and working tax credits that are being paid into my bank account at the moment based on this 2010 to 2011 income figure? Or are the payments I am currently getting based on my estimated income for April 2011 t0 April 2012?

I'm worried because hubby's got a new job which means a big jump in income for April 2011 to April 2012. They have asked us to tell us our income for 2011 to 2012 - but how can we provide that information when the year isn't over yet? The job is precarious and might end at any time!

Would be grateful if anyone could explain - very worried we're getting overpayments so we're not even spending the money we're getting which is REALLY hard on us at the moment.

There's a 10k disregard for income increases so if your income is under £18500 this year there won't be an overpayment. If you've given them an estimate they'll use that from April next year, it'll only affect this year if more than 18500 as above.

sweetbutternut

Hi, thanks for your reply.

I think it may be more than £18500 for 2011 to 2012. So how does this affect my current payments?

And are the tax credits and working tax credits that are being paid into my bank account at the moment based my 2010 to 2011 income?

Sorry - still a bit blur!

zagfles

If you earn more than £18500 this year then your entitlement will be based on this year's income minus £10,000. If you earn less then it'll be based on £8500.

What you are actually getting paid now will be based on last year's, unless you gave an estimate in which case that accounting for the disregard. For instance if you gave them an estimate of £17,000 it'll be based on last year's income £8500, if you gave them an estimate of £19,000 it'll be based on £9000.

Your entitlement is then worked out at renewal and there may be an underpayment or overpayment.

sweetbutternut

Thanks that's clearer now.

Just to clarify ....

"If you earn more than £18500 this year then your entitlement (meaning the money I am getting now or will be getting later?) will be based on this year's income minus £10,000. If you earn less then it'll be based on £8500. "

I didn't give an estimate for 2010 to 2011 income. That won't change - it is confirmed what I earned for that tax year. So does that mean that the money I am receiving now is safe to spend? Or if I understand what you say correctly, the amounts of tax credits I am receiving now may be affected by what I earn in 2011 to 2012?

This is the first time I've heard of the disregard. If you haven't told me I wouldn't have known. So thanks!!

sweetbutternut

Also, if I overestimate my income for 2011 to 2012, will I get back underpayments?

zagfles

sweetbutternut wrote: »

Thanks that's clearer now.

Just to clarify ....

"If you earn more than £18500 this year then your entitlement (meaning the money I am getting now or will be getting later?) will be based on this year's income minus £10,000. If you earn less then it'll be based on £8500. "

I didn't give an estimate for 2010 to 2011 income. That won't change - it is confirmed what I earned for that tax year. So does that mean that the money I am receiving now is safe to spend? Or if I understand what you say correctly, the amounts of tax credits I am receiving now may be affected by what I earn in 2011 to 2012?

This is the first time I've heard of the disregard. If you haven't told me I wouldn't have known. So thanks!!

Yes the amount you are entitled to now can be affected by your earnings now.

If your income goes above £18500 this year then your entitlement now will fall. If you don't tell them (ie give them an estimate for this tax year) then you'll be getting paid more than your entitlement and there will be an overpayment at the end of the tax year.

And yes if you overestimate there'll be an underpayment which you'll get back. Some people like to play it safe and overestimate then at least they'll owe you rather than you owing them.

sweetbutternut

Thanks so much for your help zagfles. It's been gobbledy gook to me, but you have really clarified things for me now.