How our tax credits will be affected?

oliviarosejackson

Hi everyone,

I returned to work in sept after being on mat leave for 14 months.

I have gone back part time (22.5 hours).

LO is in nursery whilst I work, which the cost is covered by tax credits.

We earned jointly in the last tax year just over £28,000.

I was only receiving maternity allowance, as I did not qualify for mat pay from my employer as I hadnt worked there for long enough. So from oct 10 till sept 11 I earned no wages. We will roughly earn the same amount this tax year, maybe a little less.

Well we manage with our money, but we don't have any spare to throw at debts or save for emergencies.

There is the possibility of me doing a little overtime to earn some extra pennies. But I don't know how it would affect our tax credits.

Are they lowering the thresh hold again next year? The overtime wouldn't be started until after Christmas, but I am not going to do it if it will affect our tax credits.

oliviarosejackson

Bump, is there anyone that can help?

HappyMJ

oliviarosejackson wrote: »

I am not going to do it if it will affect our tax credits.

Why? You will earn more and get less tax credits. Why don't you just quit your job and get more tax credits?

For every pound more you earn you will get 41 pence less next year in tax credits.
For every pound less you earn you will get 41 pence more next year in tax credits.

oliviarosejackson

Thank you for the reply.

The overtime would not be guaranteed, it would be as and when I wanted to do it. Our tax credits go towards our nursery fees. But if the Ot isn't always there, we still have nursery fees to pay. Does that make any sense?

oliviarosejackson

Also in answer to your question, I would love to quit work to be a SAHM, but it is not possible for us.

I also really dropped on with my job and wouldn't be able to get it back if I quit.

I also know that tc aren't always going to be there, so would hate quit and then have no help.

HappyMJ

oliviarosejackson wrote: »

Thank you for the reply.

The overtime would not be guaranteed, it would be as and when I wanted to do it. Our tax credits go towards our nursery fees. But if the Ot isn't always there, we still have nursery fees to pay. Does that make any sense?

Not really...

Earn more and get more money and get less tax credits.

oliviarosejackson wrote: »

Also in answer to your question, I would love to quit work to be a SAHM, but it is not possible for us.

I also really dropped on with my job and wouldn't be able to get it back if I quit.

I also know that tc aren't always going to be there, so would hate quit and then have no help.

It wasn't meant as a serious suggestion. You said you will not do overtime if you lose tax credits....

For every £100 you earn you must pay 20% tax, 11% NI and you will lose 41% tax credits so you will be £28 better off.

zagfles

HappyMJ wrote: »

Why? You will earn more and get less tax credits. Why don't you just quit your job and get more tax credits?

For every pound more you earn you will get 41 pence less next year in tax credits.
For every pound less you earn you will get 41 pence more next year in tax credits.

It's not that simple. It depends on how much exactly the OP earns this year and how much they are likely to earn next year.

If the OP looks like earning £27k this year without the OT, then earning an extra £1000 in OT could cause lower tax credits this year and next year which would make her worse off overall!

But if next year's income is likely to be substaintially higher than this year's (>10k higher) then earnings this year won't affect tax credits next year.

zagfles

oliviarosejackson wrote: »

Hi everyone,

I returned to work in sept after being on mat leave for 14 months.

I have gone back part time (22.5 hours).

LO is in nursery whilst I work, which the cost is covered by tax credits.

We earned jointly in the last tax year just over £28,000.

I was only receiving maternity allowance, as I did not qualify for mat pay from my employer as I hadnt worked there for long enough. So from oct 10 till sept 11 I earned no wages. We will roughly earn the same amount this tax year, maybe a little less.

Well we manage with our money, but we don't have any spare to throw at debts or save for emergencies.

There is the possibility of me doing a little overtime to earn some extra pennies. But I don't know how it would affect our tax credits.

Are they lowering the thresh hold again next year? The overtime wouldn't be started until after Christmas, but I am not going to do it if it will affect our tax credits.

The answer isn't straightfowards...

Can you give a more accurate estimate of what you'd earn this year without the OT?

How much is the OT likely to be worth?

What are you likely to earn next tax year (2012/13)?

oliviarosejackson

Thank you for the replies.

Without ot our income would be near enough £27,100, with overtime it would be this tax year around £27,700. So not much difference, but I would not be starting it until after the new year. But if it was worthour while I would like to carry it on for as long as I can.

oliviarosejackson

Tax year 2012/13 if I did it continually for the year it would roughly be a joint income of £31,000.

oliviarosejackson

HappyMJ wrote: »

Not really...

Earn more and get more money and get less tax credits.

It wasn't meant as a serious suggestion. You said you will not do overtime if you lose tax credits....

For every £100 you earn you must pay 20% tax, 11% NI and you will lose 41% tax credits so you will be £28 better off.

No I will not do the overtime if it affects our tc. As Ot isn't a guaranteed income. We would still have nursery fees to pay, which don't come cheap. If we didn't get the help from tc for our childcare fees, it would not be worth me working.