Bankruptcy / Nil Tax Code / Housing Benefit

mafflondon

Hi, grateful for any advice on following issue:

I went BR on 03.09.12. No surplus IPA but this month advised by HMRC of nil tax code to be put into effect. Insolvency Service has now advised me I will have a nil tax code IPA. This means by usual income tax of £400 a month will need to be paid by me to the OR's agent Moonbeever.

However, I receive Local Housing Allowance (housing benefit for private renting). I have informed them that I am due a refund of income tax dating back to BR order and future monthly salaries will not have Income tax deducted. I explained that this 'new' net income should be disregarded as I do not get to keep the income tax therefore my income remains unchanged. However, I have read some online horror stories where local authorities have not only reassessed the housing benefit award but also issued demands for overpayments as a result of the income tax refund.

Does anyone know if the OR or HMRC can intervene should this scenario happen to me (I will hear back from my local authority any day now)? I could find myself in a worse off financial position because of bankruptcy. This seems absurd.

Any advice would be welcome. Thank you.

PippaGirl_2

The LA will be fine, they know the money needs to go to the OR.

debt_doctor

Hi,

Sadly, some people have had a dreadful time trying to convince local authorities of the fact you will have no control over those monies.

Hopefully you won't have that problem.


https://forums.moneysavingexpert.com/discussion/750075
DD

jayne60

Hi I have the same scenario, I sent a copy of letter to H/B stating amount I have to pay, also a copy of my bank statement showing the payment, and all ok, do you have to re-pay moonbeaver the refunded tax? if so all you need to send in is the proof.

jayne60

just an update, my council changed their mind, and see it as extra income, they re - back dated my allowance and now in arrears, cant win !!!