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

dibdabable

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.

At present, if you have a sudden rise in income of up to £10,000 as compared to your previous year's income, then the current year's tax credit claim is generally unaffected. This is known as the income disregard.

If you have a fairly accurate estimation of the change then as long as that doesn't go above the £10,000, then there will be no overpayment because of this disregard.
I believe the £10,000 disregard is the differenece between your estimated income and the actual one;
Say you have £12000 coming in now, in April you tell the tax credit people your income will increase to £17000, but at theend of that year your actual income was £20000.

The income disregard is between £170000 and £20000, not £12000 and £20,000. So you wouldn't pay any back, does that help?