pay rise and it's effect on CTC help pls

Karma67

My husband and I receive child tax credits for ourselves and 2 children, luckily recently he has been promoted at work and has got a payrise of £8,000 more a year :j
From what I have read I have confused myself lol, if i have understood correctly, ctc are calculated from the previous years earnings and there can be a discrepency of £25k before it effects this years payment.....is this correct? or will we have been overpaid and owe them money?
Also when should we inform them ...at the end of the financial year when we have to send in the usual p60 values or do we tell them now what it should be working out so many months on new salary til April etc?
Thank you for your help x

Caz3121

The £25k disregard is now a £10k disregard. So as long as the total income for this tax year is not more than £10k more than last years there will be no overpayment, so next years payments will be based on 2012-13 income of which the payrise will have been in place for part of the year so it will be 2014-15 where you will actually see the tax credits based on his new wage

Karma67

Thanks Caz for your swift reply

now..when should I inform them of pay rise? end of financial year or now? ty

mcnolegs

Inform them now, simply cos it puts you in a better starting position for the new tax year - you need to give an estimate of this year's gross income (basically from April 12 to April 13). best way is look at what he earnt on his old salary, his payslip should show taxable pay year to date then add on 3 months worth of his new salary for Jan Feb and March. you're always better off overestimating. It's also worth calling after the start of the new tax year to give an estimate for 2013-2014 based on his new salary - the disregards are being lowered at the start of every tax year and I think for next year it is £5000. The sooner and the closer to accurate you can give any figures means you've less chance to be overpaid

Karma67

Thank you x
And hopefully my last question ...do our child tax credits reduce/stop straight away after informing them or will they remain the same until April?

Karma67

Just an update ...I phoned today and informed them about payrise ..nd as you said as it's under 10k difference this years allowance is not effected and is remaining the same until April.
Thanks for the great advice.