Whats the tax credit repayment threshold?

purplepixi

Hi all,

I'm a little confused at the mo, hopefully someone can help.

My dad told me that the Inland Revenue have increase the overpayments threshold for tax credits to £25,000 instead of £2,500 p.a.

However there seems to be conflicting advice on this.

People seem to be saying that the £25,000 threshold only applies if you've had a change in circumstances, not just a pay rise.

Is this correct.

For example, my husband is in the forces and spent a lot of time away last year, (any one in the forces will understand that you often don't know when you're going or for how long), which means they pay you some extra. We even got some more as an Iraq bonus, which was paid in Feb.

Now I've just got his P60, and he earnt approx £3000, more than the £2,500 threshold amount. Does this mean we'll be repaying. Or is it the £25,000 threshold and we won't be repaying - I'm rather confused about all this.

Thanks for your help

jasper12

generally you can earn an extra 25k in any tax year without your award being affected (although there are a couple of scenarios where you may be overpaid). Easiest way to know for sure is to either get your last award notice which will say how much more you can earn, or call the helpline and check. If you have both your p60's there you can do your declaration at the same time:D

purplepixi

Thank you

carlachloe

I dont understand this either. We earnt £2300 more than last year due to bonuses. They are asking for £1444 back from us because they said we had been overpaid. I am waiting for a breakdown from them so I can see what on earth is going on. According to this £25000 threshold surely that means we should not be due them anything? I have called 4 times about this and every single person I have spoken to has given me a different story so I just dont know. One thing I was told though was that you can lose the threshold by telling them of a change of circumstances a few times in one year (which they encourage you to do) So just be careful.

Arggggh I hate tax credits!!!

kerryallc71

that seems a lot to pay back for £2300.00 extra in your last years income.. our payments have dropped as well this time , our income was higher this time £1,373.00 higher than last years income , so our tax credits have dropped slightley , but they go up in april 2008 if our income is the same ..

so im confused as well..

see you from kerry..

if i were you i would try http://www.entitledto.com see what that estimates..

Nikki

jasper12 wrote: »

generally you can earn an extra 25k in any tax year without your award being affected (although there are a couple of scenarios where you may be overpaid). Easiest way to know for sure is to either get your last award notice which will say how much more you can earn, or call the helpline and check. If you have both your p60's there you can do your declaration at the same time:D

My award notices no longer have the 'tells us if you earn less than x amount or more than x amount bit on it. I noticed the change last on last years award notice, not sure why it's no longer on there though.

jasper12

carlachloe wrote: »

I dont understand this either. We earnt £2300 more than last year due to bonuses. They are asking for £1444 back from us because they said we had been overpaid. I am waiting for a breakdown from them so I can see what on earth is going on. According to this £25000 threshold surely that means we should not be due them anything? I have called 4 times about this and every single person I have spoken to has given me a different story so I just dont know. One thing I was told though was that you can lose the threshold by telling them of a change of circumstances a few times in one year (which they encourage you to do) So just be careful.

Arggggh I hate tax credits!!!

From what I have been told, if you do an income change of circumstance to say that you income shall be lower, your award will be based upon that new lower figure but if your income is out from that by even a pound you will have been overpaid. That is what I meant by 'generally' there is a 25k threshold.

Best to ask for a written explanation of the overpayment.

robindunne1

Tax credits are based on previous years income. If your income for the current year is less than £25,000 more than the previous year your tax credit will not be effected. This works on change in circumstances and changes in income.

If your current years income is going to be less than the previous years income, you can ask them to evaluate your award on the current years income.

If your actual income is higher than the estimate you provided then you will be over paid. The 25k income disregard does not come into play when estimates are involved as everyone could simply "estimate" there income to be 25k less than the actual, receive a high tax credit award and not be punished because of it.

Bottom line is that Tax Credits are a sham. They confuse the very people they are supposed to help. They engender reliance on the state and cost millions to administrate. They add an additional 37% effective income tax rate on people within the bracket and penalise families through clawing back over payments.

Scrap tax credits and tax us less in the first place!

Mumstheword

I agree robindunne1.

I dont earn enough to pay income tax, but my part time earnings are 'taxed' at the 37% I then lose in tax credit.

Under the old system, dh had his tax allowance for having a family. That was the worth the same no matter how much overtime he did etc. But now, with the tax credits, we lose 37% of any overtime or part time earnings. Hardly encourages us to work more - especially him as he loses his 22% to tax too!

Mumstheword

OOps, sorry , just read the sticky that this board is about helping people to claim entitlements, not bashing the policies behind them....back to topic...

I dont know hat the threshold is. But £25k sounds very steep.

larmy16

I too agree with Robindunne1. What a fiasco. I earn very little but according to entitledto.com I am not entitled to any WTC but can claim about £14.00 from Housing Benefit. I DO NOT WANT TO. Sorry for shouting, but I would far rather they raised my personal allowance so that I dont have to go cap in hand to the Housing Benefit dept and get into a complete fiasco with them.

I wont be claiming it because experience in the past has taught me that I will end up getting threatening eviction notices from my land lord because they have totally messed up. Also being self employed - they want to know everypenny up or down and then suddenly they stop paying the money hence the evcition notices.

NO THANKS! LET US KEEP THE MONEY WE HAVE EARNED TO PAY OUR BILLS.

Oops sorry shouting again - but it makes me so mad!!!!!!!!!:mad:

PS I have never understood how they work out tax credits and am almost glad that it appears I am not entitled to them. Skint as I am