Tax credits income fall disregard query

fivegoldstars

Quick query - wonder if anyone can help.

Brief overview - claimed tax credits 2011/12. Received a small amount. Was advised that tax credits would stop 2012/13, as income was too high (£30k). I knew at the start of the tax year that I would be having a change part way through the year, so kept claim open. Notified tax credits at time of change, and provided an estimate of income for that year of £20k. Informed tax credits at that time that 2013/14 income would be £20k exactly. Was advised first £2,500 disregarded, so 2012/13 effectively paid on £22,500, and 2013/14 provisionally paid on £20k.
When I received last years P60, I contacted tax credits and advised I had been paid £22,450, but that this year would still be £20k as advised. I have now had my renewal through which has effectively based last year on £25k (earnings plus disregard) and 2013/14 on £22,450 (last years declared amount). When I have contacted them to say that this years income will only be £20k, they have told me that there will be no change, as they will be disregarding the first £2500 drop again. Effectively, £5k has been disregarded for one change of circs.
As I see it, 2011/12 was paid correctly. 2012/13, I have received tax credits for a person earning £25k, even though I earned £22.5, and this year, I will get the tax credits for someone on £22.5k, even though I'll only earn £20k!
Is this just the nature of tax credits, or is there any room for appeal, as this one change has meant an overpayment on last years credits (even though I received the amounts correct to my earnings), and this year, my tax credits have now dropped over £100 per month?

Icequeen99

fivegoldstars wrote: »

Quick query - wonder if anyone can help.

Brief overview - claimed tax credits 2011/12. Received a small amount. Was advised that tax credits would stop 2012/13, as income was too high (£30k). I knew at the start of the tax year that I would be having a change part way through the year, so kept claim open. Notified tax credits at time of change, and provided an estimate of income for that year of £20k. Informed tax credits at that time that 2013/14 income would be £20k exactly. Was advised first £2,500 disregarded, so 2012/13 effectively paid on £22,500, and 2013/14 provisionally paid on £20k.
When I received last years P60, I contacted tax credits and advised I had been paid £22,450, but that this year would still be £20k as advised. I have now had my renewal through which has effectively based last year on £25k (earnings plus disregard) and 2013/14 on £22,450 (last years declared amount). When I have contacted them to say that this years income will only be £20k, they have told me that there will be no change, as they will be disregarding the first £2500 drop again. Effectively, £5k has been disregarded for one change of circs.
As I see it, 2011/12 was paid correctly. 2012/13, I have received tax credits for a person earning £25k, even though I earned £22.5, and this year, I will get the tax credits for someone on £22.5k, even though I'll only earn £20k!
Is this just the nature of tax credits, or is there any room for appeal, as this one change has meant an overpayment on last years credits (even though I received the amounts correct to my earnings), and this year, my tax credits have now dropped over £100 per month?

It is correct unfortunately. There wasn't one change but two from their perspective. Your income fell from 30,000 to 22.5 for one tax year and then it fell again from 22.5 to 20 for another tax year. So the disregard applies twice. It will be 14/15 when it finally catches up.

You learnt the hard way with the overpayment that giving estimates can be problematic if it turns out to be too low.


IQ

fivegoldstars

Icequeen99 wrote: »

It is correct unfortunately. There wasn't one change but two from their perspective. Your income fell from 30,000 to 22.5 for one tax year and then it fell again from 22.5 to 20 for another tax year. So the disregard applies twice. It will be 14/15 when it finally catches up.

You learnt the hard way with the overpayment that giving estimates can be problematic if it turns out to be too low.


IQ

Yes, annoyingly it was due to an error with my wifes pay last tax year (an overpayment), and the error has been recovered from this years pay. Without this, the estimate would have been broadly correct, even though I had to calculate 2xdrops in income (both went part time for childcare) and maternity pay disregards.