Confused about Tax Credits

Kiboko

Completely confused about Tax Credits – do they pay them to you or is it what you are entitled to keep from your salary before they tax you? I ask because I am about to start a job where I will earn £24,000 p.a. I haven't worked full time since 1999 as I have 3 children (13,10 and 3)and as I am now single (my husband has moved overseas and is out of contact) I am returning to full time employment as I cannot manage on my part time salary alone. When I fill in all my details on the benefits checker it states that my Tax Credit award is £17,944 plus child benefit of £2,400(ish), now that cannot be on top of my net salary surely?

HappyMJ

It is on top your net salary. It is high due to your low income last tax year. Next year the tax credits figure will be much lower so don't rely on it too much.

Working tax credit is £1,920 plus £1,950 plus £790
Child tax credit is £545 plus £2,690 per child.

So you should get £13,275 before any amounts for childcare are added.

Child benefit is £20.30 a week for the first and £13.40 each for the other two so that totals £2449.20 over 52 weeks.

DannyboyMidlands

So doesn't it make sense to continue working part time and receiving £18k tax credits rather than going full time?

dundeediva

DannyboyMidlands wrote: »

So doesn't it make sense to continue working part time and receiving £18k tax credits rather than going full time?

Why would it? She wants to work full time to better herself. She is going to be better off!!! What are people going to do when everything changes and theyare left with nothing??

On a lighter note congrats OP on your new job, hope it all goes well, enjoy your extra WTC and CTC while you can

Kiboko

Thank you all Wow, after years of living on my part time salary (OH covered mortgage and spent the rest of his salary on himself) I am actually going to be able to treat my kids - fabulous.

The reason I am going full time is because I don't want my kids to grow up believing you can live well without working for it - I;ve always had to, we have never had any tax credits, OH earned way above the cut off amount

Horseunderwater

Kiboko wrote: »

Completely confused about Tax Credits – do they pay them to you or is it what you are entitled to keep from your salary before they tax you? I ask because I am about to start a job where I will earn £24,000 p.a. I haven't worked full time since 1999 as I have 3 children (13,10 and 3)and as I am now single (my husband has moved overseas and is out of contact) I am returning to full time employment as I cannot manage on my part time salary alone. When I fill in all my details on the benefits checker it states that my Tax Credit award is £17,944 plus child benefit of £2,400(ish), now that cannot be on top of my net salary surely?

As has been stated - £24k salary will apply to next years award. This year will be based on your part time earnings and any other benefits etc received. Hence high award for 3 children. (next year) The cutoff point for 3 children is £32k CTC and if full time you will not get WTC as your hours will be too high and wages will be over limit. But you might still get Free school meals for all children and perhaps help with school uniform for eldest next year. Worth asking Council about it. Tis an odd system, but knowing rules helps. It will be paid direct into your named bank account every 4 weeks. They disregard £2.5k if you income goes up by less than this amount, but you need to add that to your income if your income exceeds £10k than previous year. I assume this will be the case? To get an idea, deduct last years income from estimated £24k salary and see what it comes to. Good luck with new job.

zagfles

Horseunderwater wrote: »

As has been stated - £24k salary will apply to next years award. This year will be based on your part time earnings and any other benefits etc received.

Provided this year's income hasn't gone up more than £10k. OP - if your income last year was under £14k, you should tell them that you are likely to earn £24k this year otherwise you will have an overpayment.

Hence high award for 3 children. (next year) The cutoff point for 3 children is £32k CTC and if full time you will not get WTC as your hours will be too high and wages will be over limit.

Nope - the limit is about £38800 with 3 kids and that's only if no childcare or disabilities. If childcare is claimed you can get tax credits on much higher incomes.

But you might still get Free school meals for all children and perhaps help with school uniform for eldest next year. Worth asking Council about it.

No chance of free school meals on a £24k income.

Tis an odd system, but knowing rules helps. It will be paid direct into your named bank account every 4 weeks. They disregard £2.5k if you income goes up by less than this amount, but you need to add that to your income if your income exceeds £10k than previous year. I assume this will be the case? To get an idea, deduct last years income from estimated £24k salary and see what it comes to. Good luck with new job.

You're totally confused about the disregard. It's £10,000 for increases and £2500 for decreases, compared to the previous year.

loracan1

Horseunderwater wrote: »

But you might still get Free school meals for all children and perhaps help with school uniform for eldest next year.

unlikely

It will be paid direct into your named bank account every 4 weeks.

or each week.

Kiboko

Before I discovered that I was entitled to TC I was budgeting on my new jobs take home salary, it was doable 'just', no treats, no new clothes, no newspaper etc. So now this seems like riches (still not sure where the money comes from with the country going bankrupt tho), I still intend to work to a tight budget as it has been pointed out that this money will likely only be for one year, but it does mean the kids can go on school trips, have a new winter coat etc. I'm pretty used to getting by on very little so for me things will actually be easier than they have ever been.
RE: Free school meals - my kids take packed lunches, that will continue as they don't like school meals and they get a good breakfast and a hot meal in the evening anyway

midnight_express

It is very likely that you will be over paid this year. It would be wise to save some of the money for when the HMRC want it back.

lovetowinacar

Isn't it wise though to let them know actual income for this year since based on last year's much smaller income what you get will be clawed back the following year and so if spent could end up struggling the following year. Surely better to get what it should actually be based on the years income rather than the false belief of having it this year and then having it taken back next year?