Tax credits question

Elpobre

Evening all,

Just a quick question regarding tax credits. Currently claiming child tax credits as we have two children. I work full time, wife doesn't. Last year declared income was about 22k, so award was just under 5k or thereabouts.

This year my income will be just over 30k, so in order to prevent build up of overpayments I phoned up the helpline and told them the situation. They said they would be in touch with the revised award for this year.

My question is, would the 5k disregard be applied for the current year, or is it retrospective and would only have been applied when I submitted next year's claim? In other words, are we likely to lose all our award this year?

[Deleted User]

Don't forger when you renew next year - you confirm the figures for this year, the figures you provided recently are the figures used to confirm/ finanlise last year and estimate entitlement for this year. So this year you can amend the estimate and finalise as normal next year. HTH

IQ should be here shortly - a true expert!

Elpobre

I phoned up and told them exactly what the figures would be this year, but next year I expect it to be back down to 22k, so they said to phone them up at the start of the next tax year to tell them as soon as I know what the income will be.

This text taken from revenuebenefits"dot"org"dot"uk seems to answer my original question, but any confirmation would be welcome:


Income rises
Operation of the disregard for income rises between current year and previous year
Each time HMRC calculate tax credit entitlement (other than for initial awards) it normally requires a comparison between income for the current year and previous year.
Two of the income tests are relevant to rises in income. For 2013-2014 awards:

• If CYI is higher than PYI by £5,000 or less, the award will be calculated using PYI.
• If CYI is higher than PYI by more than £5,000, the award will be calculated using CYI minus £5,000."

Icequeen99

Elpobre wrote: »

Evening all,

Just a quick question regarding tax credits. Currently claiming child tax credits as we have two children. I work full time, wife doesn't. Last year declared income was about 22k, so award was just under 5k or thereabouts.

This year my income will be just over 30k, so in order to prevent build up of overpayments I phoned up the helpline and told them the situation. They said they would be in touch with the revised award for this year.

My question is, would the 5k disregard be applied for the current year, or is it retrospective and would only have been applied when I submitted next year's claim? In other words, are we likely to lose all our award this year?

Your current (13/14) award will be revised and based on 25k (i.e. 30k estimated income minus the disregard).

Your 14/15 award next year will initially be paid on income of 30k (your actual 13/14 income if your estimate is right). You can ring them in April 2014 and tell them you estimate it to be 22k again BUT you will have the 2,500 disregard for falls in income applied. So they will use an income of 24,500.

It will not be until 15/16 when the 22,000 is used again (presuming your income doesn't rise again).

IQ

Elpobre

That's great, thanks for the clarification IQ.