Child tax credit limit reduced to £26,000

SkyeKnight

biscuit1 wrote: »

http://www.bbc.co.uk/news/10416333

Sorry ..Nope not crystal clear at no point does it state that anyone earning over £26,000 will result in the complete removal of payments ..it happily states the drop from £50000 to £40000 in 2011 no mention of £26000 anywhere ..There will be more than just a few people a tad shocked at this especially when they realise they are losing there working tax and child benefit ..IF...you earn over £26000 with just the one child ...

THATS £120 A MONTH by the way

Had me moan cant afford to lose £120..wife work's for peacocks could be losing her job this week so feeling a tad grumpy just now and i am annoyed i missed this as i did know of the drop to £40,000 but was totally unaware of the £26000 drop ..bad bad timing

It should be only those claiming the "family element" of tax credits who will lose it or have some tapered away. So it is around £40 a month maximum. If you are getting £120/month in tax credits that should stay about the same or even go up.

This is the relevant part of the BBC article:
"Finally, from April 2012, the £40,000 cut-off point will be removed, and the family element will be tapered at 41p in the pound as soon as the other elements of child and working tax credits have been reduced to nil."

So, if you haven't had your child and working tax credits reduced to nil then they can't start tapering away the family element.

Sixer

biscuit1 wrote: »

http://www.bbc.co.uk/news/10416333

Sorry ..Nope not crystal clear at no point does it state that anyone earning over £26,000 will result in the complete removal of payments

That is because it is NOT the case that earning over £26k means a complete removal of payments.

The BBC article is completely clear.

The HMRC letter is misleading.

Which is the point of this thread. I don't think you've yet fully understood what's happening, Biscuit. But I'm not sure how much more simply I can put it, you know?

Rummer

I have just had my letter and can ill afford to lose the £40 a month.

Someone at work mentioned that they are also stopping child benefit payments, is that correct?

My pension contributions have gone up £80/month meaning that if the child benefit removal goes ahead I will be down £200 a month with is frightening in the extreme.

shop-to-drop

Rummer wrote: »

I have just had my letter and can ill afford to lose the £40 a month.

Someone at work mentioned that they are also stopping child benefit payments, is that correct?

My pension contributions have gone up £80/month meaning that if the child benefit removal goes ahead I will be down £200 a month with is frightening in the extreme.

If either you or your partner earn enough to pay 40% tax then it is proposed that you will lose child benefit next year. If you are paying a lot into a pension though this may take you below the threshold.

Murgatroyd21

shop-to-drop wrote: »

If either you or your partner earn enough to pay 40% tax then it is proposed that you will lose child benefit next year. If you are paying a lot into a pension though this may take you below the threshold.

Don't know the rules about CB and paying in to pensions, but you will only be able to adjust your earnings for tax credit purposes by the amount paid in to a private pension scheme, not you employers scheme.

zagfles

Murgatroyd21 wrote: »

Don't know the rules about CB and paying in to pensions, but you will only be able to adjust your earnings for tax credit purposes by the amount paid in to a private pension scheme, not you employers scheme.

That's incorrect - it doesn't matter what type of pension contribution you make, all will reduce your income for tax credits purposes.

In the case of an employer's pension scheme, it will usually reduce your taxable (P60) earnings as pension contributions are deducted before tax, so your declared employment income is lowered. This is why TCO tell you not to deduct contributions made to your employer's scheme - because they have already been deducted from your taxable (P60) pay.

In the odd cases where the employer has a stakeholder pension where employees make contributions from net pay, and the pension company collects basic rate relief at source, employees can deduct contribitions from their P60 earnings, although convincing TCO this is allowed is sometimes hard...

Murgatroyd21

zagfles wrote: »

That's incorrect - it doesn't matter what type of pension contribution you make, all will reduce your income for tax credits purposes.

In the case of an employer's pension scheme, it will usually reduce your taxable (P60) earnings as pension contributions are deducted before tax, so your declared employment income is lowered. This is why TCO tell you not to deduct contributions made to your employer's scheme - because they have already been deducted from your taxable (P60) pay.

In the odd cases where the employer has a stakeholder pension where employees make contributions from net pay, and the pension company collects basic rate relief at source, employees can deduct contribitions from their P60 earnings, although convincing TCO this is allowed is sometimes hard...

When someone asks whether to deduct the pension contribution shown on their payslip to their employers scheme, the advice is not to deduct it from their income details due to allowance being made elsewhere. Private pensions aren't treated the same way which is why if someone declares a private pension, they are allowed to deduct the contributions from the income they declare to TCO. Check the income information required when taking a call to see which pension information is asked for and disregarded when someone reports income changes.

zagfles

Murgatroyd21 wrote: »

When someone asks whether to deduct the pension contribution shown on their payslip to their employers scheme, the advice is not to deduct it from their income details due to allowance being made elsewhere.

Exactly - because it (usually) reduces their taxable (P60) income. But the point is that you can lower your income for tax credits purposes by any type of pension contribution - in the case of a private pension you deduct it from your declared income, in the case of an employer's scheme it will lower your P60 income. Same end result.

Private pensions aren't treated the same way which is why if someone declares a private pension, they are allowed to deduct the contributions from the income they declare to TCO. Check the income information required when taking a call to see which pension information is asked for and disregarded when someone reports income changes.

I don't work for TCO BTW.

But I know what you mean, there have been threads where the employer has a stakeholder pension where employees make contributions from net pay, so the P60 income is NOT lowered, and convincing TCO that they are right to deduct contributions is hard...

https://forums.moneysavingexpert.com/discussion/3170710

https://forums.moneysavingexpert.com/discussion/3256762

I see kerryallc71 is on this thread, she is the expert on this:)

biscuit1_2

Sixer wrote: »

That is because it is NOT the case that earning over £26k means a complete removal of payments.

The BBC article is completely clear.

The HMRC letter is misleading.

Which is the point of this thread. I don't think you've yet fully understood what's happening, Biscuit. But I'm not sure how much more simply I can put it, you know?

Sorry your correct i dont understand it ..at all ..so do i contact them or leave thinks as they are !!!!

shop-to-drop

biscuit1 wrote: »

I to recieved this letter and was surprised to say the least. Do i follow the budgets ..not really i do read up the following day, and to be honest don't remember seeing this figure of £26,000 anywhere.What is causing me some distress is the fact that we earn around £35,000 between us with 1 child recieving £41.40 child tax credit but also £81 working tax credit so lose them both a total of £122 a month in one fell swoop ..or do i have the wrong end of the stick..

Biscuit it would appear to me that the reason you will lose so much in one go is because you are being overpaid tax credits this year. I'm no expert but I'm sure you shouldn't be getting WTC on £35,000 a year and one child. With child benefit you get £200 benefits for one child did you ever consider this figure was much too generous especially given you have good salaries? You need to check the figures on last years award to see if they are correct, did your income more than double since last year? You should probably take the time to give them a ring to get this sorted so that you know where you stand.