Tax Credit Trouble please help

LordNox

I need some serious advice please in how to proceed with my Tax Credits....

This past year 2012 to 2013 I recieved full tax credit £250 per week totalling £13000 this was because my previous year 2011 to 2012 accounts were based on a self employed income of £5000 for the year.

During the year my income increased exponentially and my final accounts for renewal this July is is £38000 this means that for 2013 to 2014 my tax credits will be £0 and I am going to have to pay the £13000 back.

But this is the crunch my income for this year 2013 to 2014 is going to be no more than £6000 because we have changed business and are starting again the contract previous year has been lost.

How will this effect my tax credit because without it this year we are going to eating out of a soup kitchen!

Can someone please tell me how to go about sorting this mess so that we can continue receiving tax credit and pay back our overpayment in reasonable amounts?

davehughes182

there may not be a way. If you earned 38k last year, then you might not be eligible to receive TC and so anything you have received you would need to payback. Did you not notify HMRC when you realised your income was increasing?

Icequeen99

LordNox wrote: »

I need some serious advice please in how to proceed with my Tax Credits....

This past year 2012 to 2013 I recieved full tax credit £250 per week totalling £13000 this was because my previous year 2011 to 2012 accounts were based on a self employed income of £5000 for the year.

During the year my income increased exponentially and my final accounts for renewal this July is is £38000 this means that for 2013 to 2014 my tax credits will be £0 and I am going to have to pay the £13000 back.

But this is the crunch my income for this year 2013 to 2014 is going to be no more than £6000 because we have changed business and are starting again the contract previous year has been lost.

How will this effect my tax credit because without it this year we are going to eating out of a soup kitchen!

Can someone please tell me how to go about sorting this mess so that we can continue receiving tax credit and pay back our overpayment in reasonable amounts?

Your 12/13 will be based on 28,000 because there is a 10,000 disregard.

Your 13/14 will initially be paid on 38,000 but you can ring and give an estimate of 6,000. They will use 8,500 because they disregard teh first 2,500 of the fall in income. However if your estimate turns out to be wrong you risk a further overpayment.

Recovery will be at 100% if you get 545 or less or 25% above that.

IQ

LordNox

IQ

Thanks for your reply.....

So if they except my drop in income to £6000 / £8500 they will recover 100% of my overpayment?

My award would be £250 per week and therefore I'd actually get £0 for the week in reality is that right?

I really appreciate the help and if thats what has to happen so be it

Icequeen99

At 8,500 income you won't be getting maximum award (so probably not as much as you got last time). Max recovery will be 25% of your award.

IQ

leveller2911

LordNox wrote: »

This past year 2012 to 2013 I recieved full tax credit £250 per week totalling £13000 this was because my previous year 2011 to 2012 accounts were based on a self employed income of £5000 for the year.

During the year my income increased exponentially and my final accounts for
renewal this July is is £38000 this means that for 2013 to 2014 my tax credits
will be £0 and I am going to have to pay the £13000 back.

You must have known your income would increase dramatically, from £5k to £38k is a huge jump so it wouldn't have taken you long to know this so why didn't you contact Tax credits and notify them. Did you save all of the tax credits as you surely must have known you would have to pay them back?.

But this is the crunch my income for this year 2013 to 2014 is going to be no
more than £6000 because we have changed business and are starting again the
contract previous year has been lost.

So you had no idea your 2012-13 year was going to increase drastically but you do know the year you have started now (2013-14) you will only earn £6k. You can get another contract, life hasn't finished.

How will this effect my tax credit because without it this year we are going to eating out of a soup kitchen!

Can someone please tell me how to go about sorting this mess so that we can
continue receiving tax credit and pay back our overpayment in reasonable
amounts?

As I posted above you must have known you were going to have a massive overpayment and would need to pay them back so I would imagine you have all the money tucked away in the bank ready to pay back in full.

There really isn't any excuse for not knowing within 2 months of starting the year that your income was going to increase dramatically from £5k to £38k.

You need to start keeping accurate accounts each month so you you know what your yearly income is likely to be. Tax credits need estimates and with monthly accounts you can estimate accurately.If you don't do accurate accounts then you shouldn't be self employed.