How much income increase reduces tax credits ?

zagfles

gilbutre wrote: »

But if it's all about the difference between one tax year to the next, then you can increase your income by, say, £8,000 each tax year, while receiving exactly the same amount of tax credits forever ? o_O

The highlighted bit explains why that's not the case! The amount is disregarded from one tax year to the next, not forever!

So say your income in 2010/11 was £8000, then in 2011/12 was £16,000, then in 2012/13 was £24,000.

In 2011/12 they would assess you on an £8000 income (ie the £8000 rise that year is disregarded), in 2012/13 they would assess you on a £16,000 income (the £8000 that year is disregarded, but the £8000 rise the previous year isn't).

gilbutre

Ok zagfles I understand now, thank you very much for the clarification. I came across a page that confirms it btw : http://www.revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/understanding-the-disregard/