Massive Tax credit drop

Wee_fudge

Hi there,

I'm looking for some advice for my sister.

She's had her tax credits reduced by quite a bit and its having quite an impact.

She's married with two kids, aged 3 and 4. Her husband works full time. She's not employed at the moment, but starting college in a few weeks.

Her husbands earnings last year were c.17000 before tax. They will be the same this year.

Last year they recieved around £100 WTC per week and £107 CTC per week. This year they are receiving zero WTC and £107 CTC per week.

Does this sound right? It seems a bit low to me.:huh:

Thanks in advance.:)

mummyroysof3

I would have though they would still get WTC on that income and working full time

KennyPalin

depends on what their joint earnings were the year before, were they much lower?

Wee_fudge

KennyPalin wrote: »

depends on what their joint earnings were the year before, were they much lower?

They were lower as my BIL was unemployed for 9 months they were on a combination of ESA and JSA.

Icequeen99

Wee_fudge wrote: »

They were lower as my BIL was unemployed for 9 months they were on a combination of ESA and JSA.

That explains it. Tax credits are based on previous year income normally unless current year is much higher but even then some part of the rise is disregarded.

It means that when you move from benefits into work, your first year at work is paid at a higher amount that it would be normally.

But they have presumably gone from ESA/JSA income to £17,000 so it makes sense that their tax credits would fall.

IQ

Pedent

There are a few assumptions built into this (e.g. no disabilities, no eligible childcare costs), but:

£1,920 (Basic element)
+ £1,970 (Couple and lone parent element)
+ £790 (30 hour element)
+ £545 (Child Tax Credit Family element)
+ £2,720 (Child element)
+ £2,720 (Child element)
= £10665 Maximum Award

£17000 Income
- £6,420
= £10580
x 41%
= £4337 deduction due to income

£10665 Maximum Award
- £4337 deduction due to income
= £6328 award (£121/week)

The award of £107/week suggests income of closer to £18780 last year. Were there any bonuses or benefits in kind (or perhaps a small amount of income from your sister) that would account for the difference?

Pedent

Pedent wrote: »

There are a few assumptions built into this (e.g. no disabilities, no eligible childcare costs), but:

£1,920 (Basic element)
+ £1,970 (Couple and lone parent element)
+ £790 (30 hour element)
+ £545 (Child Tax Credit Family element)
+ £2,720 (Child element)
+ £2,720 (Child element)
= £10665 Maximum Award

£17000 Income
- £6,420
= £10580
x 41%
= £4337 deduction due to income

£10665 Maximum Award
- £4337 deduction due to income
= £6328 award (£121/week)

The award of £107/week suggests income of closer to £18780 last year. Were there any bonuses or benefits in kind (or perhaps a small amount of income from your sister) that would account for the difference?

Actually, taking the 30 hour element out of the above calculation I get £106/week, pretty much what you say she's getting.

You said that your sister's husband works full time. Does he work more than 30 hours/week, and if so is this recorded correctly on the award letter?