surely this can't be right?

an9i77

Hi

I have been sent a letter from tax credits giving me my entitlement for this year. I was working until a couple of months ago when I had to stop due to ill health and claim ESA. My partner does not work. They've awarded us £2289 tax credit for the year based on my earnings to date and assuming I will stay on ESA I think.

Now I have had an operation to resolve the problem that was preventing me from being able to work and will be starting a new job next week as i am now fully recovered. I will tell them about all this, but in the letter they sent me it states

Income gone up? tell us now to keep your payments on the right track. This does not usually affect your tax credits payment for this year. They will stay the same until 5 April 2013 so long as there are no other changes in your income or circumstances.



So does this mean I can have a massive increase in income (in my case from ESA to a £32k job) and still receive the amount of benefits I've been told.

Not that I'm complaining, but that does not seem right to me.

midnight_express

They may well go on paying you for the rest of the year. The problem is that you could en up with a large overpayment. If I was you I would inform HMRC of your change of circumstance and put the money in a savings account in case they want it back.

Icequeen99

an9i77 wrote: »

Hi

I have been sent a letter from tax credits giving me my entitlement for this year. I was working until a couple of months ago when I had to stop due to ill health and claim ESA. My partner does not work. They've awarded us £2289 tax credit for the year based on my earnings to date and assuming I will stay on ESA I think.

Now I have had an operation to resolve the problem that was preventing me from being able to work and will be starting a new job next week as i am now fully recovered. I will tell them about all this, but in the letter they sent me it states

Income gone up? tell us now to keep your payments on the right track. This does not usually affect your tax credits payment for this year. They will stay the same until 5 April 2013 so long as there are no other changes in your income or circumstances.



So does this mean I can have a massive increase in income (in my case from ESA to a £32k job) and still receive the amount of benefits I've been told.

Not that I'm complaining, but that does not seem right to me.

That message only applies if income has increased compared to last year.

In your case I think you are saying your income fell, so they re-calculated this year's award. If that is the case, any rise (even a £1) will impact on your tax credits so you need to tell them as soon as possible.

IQ

princessdon

I think they have a £10,000 disregard - hence for most (as this is a lot to go up) it won't affect this years award.

Seems totally bizarre otherwise - I mean as you say you could end up being paid TC when not even eligible.

Horseunderwater

Your award is based on income from last year. Not current year. Put the money away for now and each time it arrives until it gets sorted. Tell them in both writing and by phone once you have your new job and let them sort it out. Do not spend that WTC until you know final decision. Much safer that way. Meanwhile you get to earn a little interest on it. If you do and can get a job that has a gross income of £32k then I am certain you'll not get anything at all. Is it for CTC or WTC? You did not say. Good luck in getting a new job.

an9i77

It's mainly for CTC although a little for WTC. I'm worried now that the money they paid me earlier in the year (which has been spent) they will want back as I was earning around the same then as my new job (£32k) but only for a few months as I fell ill at the end of June.

They have based the award on this though, as I told them I was working full time until I fell ill. (but at the time I was being paid it, it was based on my previous years income which was much lower due to maternity leave)

I'm very confused as to how it all works - is it likely they will want the money back (from earlier in the year) even if the award for this year is based on my earnings for those few months?

I will put the money aside from when my new job starts, unless they reduce the award, as I can't imagine they will let me keep it if I am being paid £32k, also my partner will be renting out a property soon so that will increase our income even further. TBH it will feel wrong to spend /keep it as our family income will go up to around 50k

Icequeen99

princessdon wrote: »

I think they have a £10,000 disregard - hence for most (as this is a lot to go up) it won't affect this years award.

Seems totally bizarre otherwise - I mean as you say you could end up being paid TC when not even eligible.

The disregard doesn't apply in this case.

As I said above, if the OP has reported a lower income from last year and had her tax credits re-calculated on it, every £1 her estimate is out will reduce her tax credits and potentially create an overpayment so she needs to estimate their new total household income for the year now.

Tax credits spread income evenly over the year. So if you earn nothing in the first 6 months and 30,000 in the last 6 months, you are treated as earning 15,000 in both periods for tax credits. This means that you can end up with an overpayment even if you reported the change in income as soon as it happened because the income is spread backwards not just forwards.

IQ

an9i77

Thanks for that icequeen. That will probably mean we are entitled to zilch for the year as although the past two months I have been on ESA, I was earning 32k before that and will be again as of next Monday, and when my partner rents out his property it will be even more.

I think I am going to phone them up and tell them to stop paying me anything! As I don't trust myself not to spend it if it is sitting there in my bank account, and if it's not my money it's best not to have it in the first place.