Child tax credit threshold

Kittypuss85

I have 2 children, in childcare 2 days a week, my partner and I work full time hours and we get child tax credits. Our household income is literally just under the £40,000 income threshold.

Now I work for the police, there was mandatory overtime during the riots, bank holiday shifts are payed more than a normal day, and it's adding up, I'm concerned it's going to push us over the £40000 for this financial year.

I don't understand how it all works. If we earn more than £40000 as a household, will we have to pay all our tax credit for this year back? Am worried now, we barely get by each month and can't afford nursery without this help and won't be in a position to repay it!!!

Any advice appreciated
Thanks

Icequeen99

Firstly, some people have a threshold that is higher than £40,000. If you have more than 1 child and high childcare costs, your cut-off could be much higher than that.

Secondly, even if your cut-off is £40,000, if your previous year income was lower than your estimated current year, it is that figure that will be used. You will covered by the disregard which allows you to earn up to £10,000 more than your previous year income before it affects tax credits.

Of course your extra income will be taken into Account for the next tax year.

The only way it would affect you this year is if you are being paid tax credits based on a current year estimate. So if you told HMRC that you think your income will be lower than last year and gave them an estimate, and you increase that estimate it will impact your tax credits immediately and may create an overpayment.

IQ

melly1980

Kittypuss85 wrote: »

I have 2 children, in childcare 2 days a week, my partner and I work full time hours and we get child tax credits. Our household income is literally just under the £40,000 income threshold.

Now I work for the police, there was mandatory overtime during the riots, bank holiday shifts are payed more than a normal day, and it's adding up, I'm concerned it's going to push us over the £40000 for this financial year.

I don't understand how it all works. If we earn more than £40000 as a household, will we have to pay all our tax credit for this year back? Am worried now, we barely get by each month and can't afford nursery without this help and won't be in a position to repay it!!!

Any advice appreciated
Thanks

I'd advise to be carefull about giving estimates as the above poster has suggested. If your wage is variable then your estimate will be wrong and you will definately have an overpayment which you will have to pay back.

There is something called the income disregard which means provided that you dont earn x amount more this year then it is disragarded BUT next years tax credits are adjusted down. I know so many people who have fell foul of this simply by not knowing about it, they get used to living to a particular standard in year 1 then in year 2 they dont have more wages but the tax credits go down.

As for solutions its the tough old one that like so many people you are living either up to or beyond your means and it isnt going to get any better in the days of slash and burn policies by the current government. Im not going to lecture you and say that "you should be able to live on x amount because I do"...you will get that off other people who are idiots if Im honest because they dont take account of so many variables. All I can say is take a good hard look at where you spend everything and question if it can be reduced / removed for the time being.

melly1980

sorry, I misread the above posters :rotfl:

they didnt suggest estimating your income

bestpud

melly1980 wrote: »

sorry, I misread the above posters :rotfl:

they didnt suggest estimating your income

Now who's the idiot?