Child tax credits after a 'payment holiday'?

MrsCautious

hi, can anyone help? I've been in receipt of child tax credits since my husband died quite recently and have a lot to learn.

At work (I am a director of a small company) I am having to consider a 'payment holiday' due to cashflow issues (which will of course hopefully be temporary.) I don't understand how this will affect tax credits next year. I thought that I would be able to get more money through tax credits due to lowered income, stating I have been working but including my details of lower pay due to said payment holiday (likely to be a number of months.) However, a friend has suggested this would have an adverse effect and I would get less as I won't have been paying tax through not being paid for those months.


are they right?


I'm sorry if this is a naive question but it has been hard for me to get my head round various financial aspects of my bereavement - the stress can be overwhelming -- bit of a vicious circle and contributing to me needing to consider a 'payment holiday' in the first place. .

Thanks to anyone who can put me straight.

zagfles

If your income has gone down this year then you should get more CTC/WTC next year, assuming your working hours haven't gone below 30 (or below 16 if they were previously between 16 and 30).

However as you're director of the company you may need to show that the payment holiday was a genuine necessity because of cashflow, rather than an attempt to manipulate your income to get more tax credits, since there are notional income rules which cover exactly this situation.

MrsCautious

Thanks for explaining that, I will also need to say about having time away from work.

Icequeen99

MrsCautious wrote: »

Thanks for explaining that, I will also need to say about having time away from work.

Are you taking time away from work during the payment holiday? That would cause a tax credits problem.

Also, work has to be done for payment or in expectation of payment. You could fall foul of that rule.

I would get some advice if I were you.

IQ

MrsCautious

Thanks Ice Queen, I'm not planning on having time away during the payment holiday but I have had time away since losing my husband. I also have income connected with my personal situation and have had conflicting advice about what should and shouldn't be counted towards tax credits -- from the tax credit people themselves -- so it's all confusing me a fair bit. I'm going to try and make an appointment with CAB. Thanks for flagging up I need advice.

Horseunderwater

MrsCautious wrote: »

hi, can anyone help? I've been in receipt of child tax credits since my husband died quite recently and have a lot to learn.

At work (I am a director of a small company) I am having to consider a 'payment holiday' due to cashflow issues (which will of course hopefully be temporary.) I don't understand how this will affect tax credits next year. I thought that I would be able to get more money through tax credits due to lowered income, stating I have been working but including my details of lower pay due to said payment holiday (likely to be a number of months.) However, a friend has suggested this would have an adverse effect and I would get less as I won't have been paying tax through not being paid for those months.


are they right?


I'm sorry if this is a naive question but it has been hard for me to get my head round various financial aspects of my bereavement - the stress can be overwhelming -- bit of a vicious circle and contributing to me needing to consider a 'payment holiday' in the first place. .

Thanks to anyone who can put me straight.

Hi there
Do you get just Child tax credit or both working and child tax credit?
If the latter then the working hours part will affect your WTC bit only. It is purely income that affects both WTC and CTC.
A single parent has to work a minimum 16 hours per week to get WTC for this tax year and have an income of less than £6420 for full amount and between that and approx £15 860 for a reduced or tapered amount. For anyone who's income is over that, then you should only get CTC and from what I was told yesterday - £2.5k income drop is disregarded for current year and carried forward to settle up later on at renewal time. That was the reason I was given for me not being able to get my underpayment now. System tells them my income is £18019 - but it is actually £15519. Hence why it will not pay out.
Oh and what tax you pay to HMRC has nothing to do with Tax credits as such - it is your total gross income for the year that qualifies you. So anything earned above £300 is counted. And there are also some rules about losses, if there are problems with a business that can be carried forward as well. But you will not know that until your accounts are settled for the year.
Oh and try not to worry or get stressed out over it all. Make a list of things to do as you think of them - then put them into priority order of importance to deal with one at a time. Always very hard when you lose someone close suddenly - no matter what the reason. That's that way I do things - lists help me keep it all in check. It will all come right in the end.

MrsCautious

Horseunderwater wrote: »

Hi there
Do you get just Child tax credit or both working and child tax credit?
If the latter then the working hours part will affect your WTC bit only. It is purely income that affects both WTC and CTC.
A single parent has to work a minimum 16 hours per week to get WTC for this tax year and have an income of less than £6420 for full amount and between that and approx £15 860 for a reduced or tapered amount. For anyone who's income is over that, then you should only get CTC and from what I was told yesterday - £2.5k income drop is disregarded for current year and carried forward to settle up later on at renewal time. That was the reason I was given for me not being able to get my underpayment now. System tells them my income is £18019 - but it is actually £15519. Hence why it will not pay out.
Oh and what tax you pay to HMRC has nothing to do with Tax credits as such - it is your total gross income for the year that qualifies you. So anything earned above £300 is counted. And there are also some rules about losses, if there are problems with a business that can be carried forward as well. But you will not know that until your accounts are settled for the year.
Oh and try not to worry or get stressed out over it all. Make a list of things to do as you think of them - then put them into priority order of importance to deal with one at a time. Always very hard when you lose someone close suddenly - no matter what the reason. That's that way I do things - lists help me keep it all in check. It will all come right in the end.

Hi Horseunderwater, thank you for your kindness, I really appreciate you taking the time to explain that to me, it appears two symptoms of grief are anxiety and short term memory loss -- so the smallest thing is making me stressed and then I can't remember the details of what I've been told. I am doing my best to write everything down and keep on top of lists of stuff to do, but it is keeping me awake at night, I feel such a responsibility to get it all right - my husband was very sensible.



A very simple thing I am struggling with understanding is the position when it comes to savings that were in my husband's name and now will come to me, perhaps I have misunderstood, but one adviser told me, only the interest would be counted but another told me (or I understood them to tell me) as it was money as part of an estate it should be counted -- as in the lump sum, not just the interest.

I am working 30 hours now but have had time away. Thank you for explaining re WTC as opposed to CTC -- I will check how this is broken down in the sum I receive.


I have just now emailed the CAB and hope I feel better about this after an appointment with them.

Thanks again.

Icequeen99

Horseunderwater wrote: »

Hi there
Do you get just Child tax credit or both working and child tax credit?
If the latter then the working hours part will affect your WTC bit only. It is purely income that affects both WTC and CTC.
A single parent has to work a minimum 16 hours per week to get WTC for this tax year and have an income of less than £6420 for full amount and between that and approx £15 860 for a reduced or tapered amount. For anyone who's income is over that, then you should only get CTC and from what I was told yesterday - £2.5k income drop is disregarded for current year and carried forward to settle up later on at renewal time. That was the reason I was given for me not being able to get my underpayment now. System tells them my income is £18019 - but it is actually £15519. Hence why it will not pay out.
Oh and what tax you pay to HMRC has nothing to do with Tax credits as such - it is your total gross income for the year that qualifies you. So anything earned above £300 is counted. And there are also some rules about losses, if there are problems with a business that can be carried forward as well. But you will not know that until your accounts are settled for the year.
Oh and try not to worry or get stressed out over it all. Make a list of things to do as you think of them - then put them into priority order of importance to deal with one at a time. Always very hard when you lose someone close suddenly - no matter what the reason. That's that way I do things - lists help me keep it all in check. It will all come right in the end.

Again, the 15860 is for CTC people only and a small number of WTC/CTC people. It isn't helpful to keep quoting it as it can confuse people.

Re the 2,500 disregard, you have been told incorrectly. It applies at renewal time as well. It will only not apply from April 2013. Your claim for 12/13 will be finalised on 18019. Your 13/14 will be based on 15,519 (previous year).

'Anything earned over £300 is counted' - the £300 disregard only applies to certain income not all income.

Losses for the self-employed yes, but the OP is a Director of a Ltd Company. So her income will be employment income and dividends.

OP: If you have had time away and dropped under 30 hours, it may have affected your claim.

The savings that you inherit are only counted in terms of the interest received and even then only the amount over £300.

Have you checked to see if you are entitled to any bereavement benefits?

I am sorry you are having to deal with this. Take care of yourself.

IQ

MrsCautious

Thank you Ice Queen, I am in receipt of Bereaved Parents' Allowance and the one-off £2,000 payment...and I got a £10 Widow's Xmas bonus yesterday. I understand which elements of this are taxable.

I have various sums outstanding as I await probate. I have just got notification of an appointment with CAB next week.


I took 3 months off after losing my husband and am now doing my best to get on, but (stating the obvious) it's very difficult.

The advice here has been very helpful and puts me in a more informed position ahead of my appointment, thank you.

Horseunderwater

I have just had a read of their on line tax credit manual and from what I can see the only income from savings that affect tax credits is the interest paid each year. However if that interest is less than £300 it's classed as nil, they are only interested in any interest over that amount and you'd have to have a significant amount of capital to generate that sort of interest in this day and age me thinks.
Did you know that you may also be entitled to Widowed parents allowance of up to £105.95 per week. Google it and a link for it should come up - the form can be downloaded to your PC to complete. You have to be under state pension age and have at least one child for whom you get child benefit. The deceased has to be their parent. Thought I'd mention that one. May be income related - so that one could be where savings would if over certain amounts mean it is not payable.
One thing that can help with grief I find is to still talk to the person that you have lost and ask them what they'd do and then you will hear them talk to you in your mind with that certain voice they had and you often get the correct answer too. I still talk to both my Mum and Dad and they have been gone since the 80's. I find it still helps me even now. I have often told this to other people and they said that when they allowed themselves time to talk to their lost one, that it helped them too. And if you get in a pickle - think what they'd say or do at that point. And if they would have laughed, then that's what you should do too? All small ways of coping with it all. Hope it helps a bit.

MrsCautious

Hi again horseunderwater, thank you for all your input, I really do appreciate it. I have organised myself an appointment for next week where I hope to go through all figures of my income for this year, including interest on savings, money that has come from pensions paid out to me, bereaved parents' allowance (which I have been in receipt of for a few months and does count towards ctc) and other amounts still due to me once probate is granted if this happens before the end of the tax year. On paper, due to my bereavement, my income has leapt up, despite not being paid at work. I have told CTC ppl about this and they have asked me to contact them ASAP with an estimate for this year's earnings, and my appointment will help me do this, and understand about how much of a pension and interest in these circumstances doesn't count. It is very complicated. Next year will be the last year I will be able to claim because if the new rules on savings as I understand it and I want to get it right.

With regards to your kind words about talking to my husband, thank you, I am sorry for your loss, things are still very raw for me, there has been a great deal of trauma, I must say I do find some comfort in people's kindness, thank you.