Family tax credits

Bighandmo

I wonder if anyone can help me. We are a family of 5 with a severely disabled child. I receive a wage of £34,000 plus I work a responsibility payment at work which equates to approx £550 a month. This takes my wages to approx £40,000 a year. My wife is a sahm who receives carers allowance for our oldest child. There is no other income. We receive the child element, the disability element, and the basic family element. This equates to about £12000. It is reduced, due to my income to about 3700. (they deduct about £8792 due to my earnings). This has brought our tax credits to approx £60 a month paid to us. My question is, if I give up my responsibility at work and return to just doing my main job at about £34,000 a year, how much are my tax credits likely to rise by. There have recently been promotions at work and many people who receive FTC didn't apply as they said they would not gain anything. If I knocked the responsibility on the head, how much would I be likely to be better off or lose out on?

Bighandmo

I will be eternally grateful for anyone who can help as I haven't a clue how to work it all out

itch_for_a_glitch

I'm no expert, but tax credits are reduced by 41% for earnings so, if you drop £6k TC should rise by £2460.
How much tax & NI do you pay on that £6k ?

On the whole I reckon your income will drop whether thet drop is acceptable is a personal value judgement
*edit*
I reckon (on £6k) you pay £1200 income tax, £720 NI, and "lose" £2460 in tax credits so you end up with £1620 ish for your extra responsibility, or £30 aweek.

Icequeen99

Your tax credits would increase by a maximum of £2,460 by dropping the £6000. So you are far better off with the responsibility payment, or at least financially.

IQ

Bighandmo

It's worked out as 2629 wage. 516 responsibility. Tax 480. NI 251. It is sold as "Earn an extra 130 a week on top of your wages!"

Bighandmo

That's monthly- lol

Bighandmo

Just out of interest. How would I fare if I took on the half responsibility which is £2500. Would that fare me any better - sorry I'm thick

Caz3121

I believe the disregard is £2,500 decrease so there would be no change.
Remember if you change part way through the year you will not see the changes for some time

eg £34k wage + £6k extra = £40k
if this was your income last year then your tax credits are based on this

Lose RP (August?) income this year = £36.5k (£34k + 5 month RP) so with the disregard they will treat your income as £39k

zzzLazyDaisy

Try inputting the various figures into the HMRC tax credit calculator and see what it throws up

http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx

Icequeen99

Caz3121 wrote: »

I believe the disregard is £2,500 decrease so there would be no change.
Remember if you change part way through the year you will not see the changes for some time

eg £34k wage + £6k extra = £40k
if this was your income last year then your tax credits are based on this

Lose RP (August?) income this year = £36.5k (£34k + 5 month RP) so with the disregard they will treat your income as £39k

Caz makes an important point, I forgot to mention. In the first year, even though the max rise from tax credits will not rise as much because of the 2,500 disregard. This means they will ignore the first 2,500 fall in income, so you won't see the full benefit until the following year.

IQ

Bighandmo

Apologies for thickness here. There is a genuine opportunity to take a lesser responsibility at work for half the pay! 2500 a year. The 6000 I have at the moment is almost a full time job - cant believe it equates to 30 a week "profit". If I were to take the lesser one of the two, what would happen with regards to money - it would take my wages to 36,500. Would my tax credits improve??? We get 240 FTC at present per month.