tax credits now hubby redundant

silverflowerchick

Hi my husband has been made redundant and is now out of work. only got 1 weeks stat redundancy pay as only there in company for last year. Last year he earned £37,000 so I rang tax credits to inform them of a change of income and they are sending a new award letter.we are now living on my small part time wages of £88 a week
my question is that becuase tax credits are based on last years earnings, if you look at it like that, my husband earnt 37k so therefore we are not entitled to any tax credits this year. however i did then read that if you have a BIG drop in income then payments could be reworked on this new years current salary and therefore we would get extra help.
i am very worried as we have a mortgage to pay, my husband is frantically trying to find a new job, im trying to find more hours, but its very difficult. we also have 2 children.

di3004

Hi there

So sorry to hear this bad news.

I'm sure someone will be along soon to advise you on this one, but as these things happen unfortunately, job losses etc, maybe the circumstances in this case will differ as such.
As you also have 2 children as well, you should now be entitled to Child Tax Credits obviously not working tax credit.

Hopefully someone will be along shortly, good luck and hope something comes up for your husband very soon.

Victor_Meldrew

Hi,
I'm in the same kind of situation. I was made redundant in August 2011, claimed JSA for 6 months and now get nothing. I got a hefty redundancy payout and my wife got a big promotion in October to £27500 a year.

I have 2 kids (11 and 13) but this tax year my wife is the only income earner at 27.5k. I get nothing - no benefits (to be honest I haven't even tried to claim anything). So that would be our total income plus a few quid from savings (<£300).

Will we be able to claim working tax credit? Can you phone them with your income for the COMING year and have your entitlement based on your CURRENT income rather than last years? It seems rather unfair to base this years award on last years income.

Any ideas? The directgov website says I'm not entitled to anything but the tables suggest I am.

Edit: I am not currently claiming any tax credits so this would be a new claim.

xylophone

http://www.direct.gov.uk/en/Employment/RedundancyAndLeavingYourJob/Redundancy/DG_182503
http://content.durham.gov.uk/PDFRepository/Bens-after-Redundancy-factsheet-09.pdf

Paperweight

My situation is quite similar as I was made redundant in October last year having earned a decent salary until then.

I am not an expert but I believe the following to be the case. Hopefully an "expert" will be able to confirm this for you later.

First the good news. You can have your tax credits based on this tax years expected income rather than last tax years actual income, if your income has fallen since last year. However, they will disregard the first £2,500 of your lower earnings. Therefore if you are earning £88/week which is about £4,500 a year, they will base your tax credits on your income being about £7,000.

Now the bad news. In order to claim any Working Tax credit you now need to be working at least 24 hours a week between you (plus one of you must be doing at least 16 hours per week). Assuming you are being paid at least the minimum wage it doesn't look as if you are doing enough hours and so will get no WTC. I think you will still be entitled to Child Tax Credits however.

If you could find a way to up your working hours to 24 per week it would make a considerable difference. Easier said than done though I'm sure.

Hope that helps.

Paperweight

@ Victor.
Below is how I think it works based on my own experience.

When you complete an online assessment it will tell you that you have no tax credit entitlement. However you should still contact the Tax Credit helpline. They will eventually tell you that whilst you are not entitled to anything based on last years earnings, you are entitled to Tax Credits based on this years projected income. As they disregard the first £2500 of reduced earnings, your Tax Credits will be based on an income of £30,000. As you have 2 children, you should get some Tax Credits on that salary but it won't be a lot. According to the government tables, it will be about £925/year.

Hope that helps.

Victor_Meldrew

Thanks Paperweight,

Every bit helps.

zagfles

You can give them an esitmate of your income this year and they'll pay you based on that (plus the £2500 disregard for income drops).

Beware though - if he finds a new job after a few months you could end up with an overpayment even if you tell them straight away, bear that in mind if/when he starts earning and set some aside.

You can keep an eye on your entitlement with the turn2us calculator https://www.turn2us.entitledto.co.uk/entitlementcalculator.aspx

pmlindyloo

Don't forget OP that your OH may be entitled to contribution based JSA. This is not means tested and he will be entitled to this for 6 months if he has paid sufficient NI contributions during the last two years. Not a lot of money but 'every little helps'.

As previously said you will still be entitled to CTC.

Again as already said you need to increase your hours of working to 24 hrs, with one of you working at least 16 hrs to claim WTC. (so one of you can work 16 hrs and the other 8 hrs or one can work all 24 hrs. These number of hours can be added together from 1,2 or more jobs.)

Tax credits will probably ask for an estimate for this years income. Please don't fall into the trap of estimating too low. They will 'claw it back' as an overpayment.

Have you got any PPI for your mortgage?

If you are having difficulty paying your mortgage then do inform your lender asap to see if they will help you through this rough patch eg. payment holiday, interest only etc etc but remember this is a priority debt and needs to be paid before any credit cards, unsecured loans.

Also post on the DebtFree Wannabe forum and get some advice about managing your income and expenditure. The people over there are wonderful at saving the pennies and you do not need to be in debt to get their help and support.