tax credits advice needed

AmyLouise123

Hi please can you help me as rather confused. Are tax credits payments based on current or previous year's income? Last year's income was higher than expected. I tried to notify tax credits of this in April but they said they could not do anything until I received my renewal which was in June. I gave them an estimated income for this year and they adjusted the payments. I assumed my payments were then based on this estimate. However, this week I received a letter saying I owe £80 for last year and £420 for this year which seems like a huge amount for 4 months. I don't get this. My estimate for this year remains unchanged. Last year's income was as i say higher than we thought but I would assume the overpayment would then be for last year not this. How does this work?

zagfles

Tax credits are based on both this year and last, see this thread https://forums.moneysavingexpert.com/discussion/4702373

It's more likely that your increased income last year will lower your tax credits for this year, they may not affect last year's because of the disregard.

Not sure why TCO always claim they can't take an estimate from previous year in the renewal window - but others have said this too many times - too late for you now but in future it's best to tell them before the end of the tax year if possible eg late March.