Is tax credits awards always paid based on the last years salary?

snow_queen

Hi

We are about to have a significant drop in salary - will we not get anything from tax credits as y/e 2012 my partner will have earnt 26k but from March 2012 he will be erarning at 1st about £5-6k (new business) - so will we get tax credits at a different rate straight away or have to wait another year as will be based on to high a salary?

TIA

caz246

I am on maternity leave, my partner was unemployed for most of last year. We get £40 per month tax credits due to him working full time and me full time plus a part time job in the tax year 2010/11. Therefore we earned too much to get any more than £40, even though we were really struggling when I was on SMP.

So in answer to your question no I don't think you will get much. I could be wrong I know it's changing in April and I'm new to tax credits, it's all so confusing.

dibdabable

Our circumstances changed last April 2011 our income dropped about £7000. I simply gave them the previous years actual income from P60's etc in May( when we had the documentation) and then told them in the same phone call that our income would change for 2011 to 2012 and we were awarded according to our new income and not the previous year. You certainly shouldn't have to wait a year, imagine how difficult this would be for someone who loses a job completely.

I would give them a ring and then ring them again to check your answer matches the person before !!

Caz3121

and probably better to overestimate as if the business does better than you expect there will be an overpayment.

Also be aware that if he is registering as self employed he is best to be keeping diaries of all work done for the business as they seem to be clamping down on SE claiming they work 30 hours+ but claim they earn far less than minimum wage

snow_queen

Thanks everyone, well as childminders it does work out far less than minimum wage! But absolutely everything is put through as would be too scared of a knock on the door if we didnt!

caz2703

I keep getting conflicting advice regarding this. I have given HMRC all the figures I have to date and have told them what I will be earning in the next tax year (2012/13) as a fairly accurate approximation. However, most of the current tax year I have been on SMP (company topped this up for 18 weeks) so my 'salary' is nowhere near what it should be. Next tax year I will be well above the £10K threshold I keep hearing about but I get 2 answers when I ask how my WTC & CTC will be calculated:

1. They're based on the previous tax year i.e. 2011/12 so even though I could go from SMP to £100K (I'm not actually btw), HMRC are telling me that I would still get tax credits based on the low income from the previous year and I wouldn't be asked to pay any of it back
2. I've also been told that if I can provide them with figures for next year they can calculate what I'd get so I did and lo and behold, my tax credits go down because my salary has gone up above the £10K limit.

I've been claiming as a single mum for a few months now and need to make big financial decisions very soon which could have a major impact if I get them wrong. If I rely on the WTC & CTC to cover childcare and rent etc, the last thing I want is a big brown envelope next year asking for money for overpayments.

Does anyone know which option is right? I find it hard to believe that you could claim ignorance, earn significantly more than the previous year and not be asked to repay but this is what I've been told. If so, it's one flawed system.

caz246

dibdabable wrote: »

I would give them a ring and then ring them again to check your answer matches the person before !!

Yes I would give them a call and ask them to give you an estimate, like I said I could be wrong. I contacted them last week to tell them I was now on unpaid maternity leave and my award has went DOWN to £33 per month...I don't get how it all works! I also rang them a couple of weeks ago and asked them for an estimate based on the changes in April (they have access to the new calculator) and I was given a significantly higher figure for when I'm back to work. Which I'm not going to complain about but I would much prefer the extra money now when I need it. We will go down again the following tax year as our income will be too high again.

Good luck hope you get it all sorted.

caz246

caz2703 wrote: »

I keep getting conflicting advice regarding this. I have given HMRC all the figures I have to date and have told them what I will be earning in the next tax year (2012/13) as a fairly accurate approximation. However, most of the current tax year I have been on SMP (company topped this up for 18 weeks) so my 'salary' is nowhere near what it should be. Next tax year I will be well above the £10K threshold I keep hearing about but I get 2 answers when I ask how my WTC & CTC will be calculated:

1. They're based on the previous tax year i.e. 2011/12 so even though I could go from SMP to £100K (I'm not actually btw), HMRC are telling me that I would still get tax credits based on the low income from the previous year and I wouldn't be asked to pay any of it back
2. I've also been told that if I can provide them with figures for next year they can calculate what I'd get so I did and lo and behold, my tax credits go down because my salary has gone up above the £10K limit.

I've been claiming as a single mum for a few months now and need to make big financial decisions very soon which could have a major impact if I get them wrong. If I rely on the WTC & CTC to cover childcare and rent etc, the last thing I want is a big brown envelope next year asking for money for overpayments.

Does anyone know which option is right? I find it hard to believe that you could claim ignorance, earn significantly more than the previous year and not be asked to repay but this is what I've been told. If so, it's one flawed system.

I'm more or less in same boat as you except I am claiming with my partner and I have been told the same thing, that because our income was low this year mainly due to SMP we will get more tax credits come April, despite me going back to normal salary.

I am terrified of being overpaid. We have agreed that if we do get what has been estimated we are going to try and save some of it so that IF we have to pay anything back we'll have some savings put away. That's the plan anyway.

bungle4by4

we had the same situation. so we rang the tac credits people, and were told to apply and get rejected. and then write to explain exactly what would be happening. seemed a no hassle system. you need to be placed in the system to have a more complicated application.

caz2703

caz246 wrote: »

I'm more or less in same boat as you except I am claiming with my partner and I have been told the same thing, that because our income was low this year mainly due to SMP we will get more tax credits come April, despite me going back to normal salary.

I am terrified of being overpaid. We have agreed that if we do get what has been estimated we are going to try and save some of it so that IF we have to pay anything back we'll have some savings put away. That's the plan anyway.

It doesn't make any sense at all. How can someone have an increase in salary of more than £10K yet be given more tax credits? I have given HMRC the best estimates that I can but the dubious part of me says that I shouldn't rely on tax credits and I should work my future out based on what I will have for sure. That could mean some very difficult decisions have to be made based on what-ifs.

I have to say that after my dealings with HMRC, I have no idea how anyone manages to play the system as no-one I've spoken to on the 'inside' even has a clue!

snow_queen

it is a crazy system, so do u think i will get more or less? x