WTC in your first year of qualifying - do you have to wait until next year?

ijrwe

Hello. Worknig tax credits are apparently awarded based on your previous (tax) year's income, right? Consider the following situation - how would it work? I can't find an explanation of this in any of the official guidance.

> 12-13 tax year, you are employed full-time and earning well above the WTC threshold - would not qualify.

> At the start of the 13-14 tax year you become self-employed and earnings are such that you would now qualify for WTC.

> You apply, but of course have to submit only information for the 12-13 year, with no mention of this current year we're in.

> Accordingly, you appear to not at all qualify, despite your present work situation.

What happens - is your application rejected outright, meaning that one can only apply for WTC after a full year of having already been eligible but not being able to receive anything?

Or, do they provisionally award you £0.00 (based on your 12/13 info) and then, upon review at the end of this 13/14 tax year you tell them what actually happened (i.e. it was nothing like the 12/13 info) and they award a lump sum?


Thanks,

ijrwe

blondebubbles wrote: »

They award your claim but your award will be nil. When you receive that award notice then call them with your estimated income for 13/14. How that affects your claim will depend on how it has changed. They may award you payments if it has reduced enough.

http://www.hmrc.gov.uk/taxcredits/keep-up-to-date/changes-affect/income-changes.htm

Next year, between April and July, you will be sent your renewal form to confirm your exact income for 13/14 and your claim is checked to ensure the correct amounts were paid. If you underestimated your income you may have an overpayment. If your overestimated you may get money back.

Ah, I see - so it's just treated like they've actually known about me all this time (e.g. back in the 12/13 year) but now my circumstances have changed.

Thanks very much.

Icequeen99

But you need to be careful if you go down the estimate route instead of waiting until after the end of the year to confirm actual figures. If your estimate turns out to be too low, you could be overpaid.

IQ

ijrwe

blondebubbles wrote: »

Try to be as accurate as you can when giving an estimate though so you can avoid an overpayment.

Icequeen99 wrote: »

But you need to be careful if you go down the estimate route instead of waiting until after the end of the year to confirm actual figures. If your estimate turns out to be too low, you could be overpaid.

Sure, yea. I can be fairly sure how the next six months will pan out but I'll give a conservative estimate and then maybe get a bit extra after the end.

Equally I'd be happy to just wait until the end of the year and tell them accurately (and then get the whole year's award in one go?) - it won't make a huge difference to me. Do mid-year changes of circumstance annoy them a bit, you think? Maybe they prefer people to wait until the end.

Icequeen99

blondebubbles wrote: »

Never wait til the end of the year. That's how most overpayments happen. They want you to call as soon as possible. Most changes need to be reported within one month. Income is a little different but basically as soon as you know it's different, update it. I get in your case that wouldn't happen as they haven't awarded anything but best to get in to the swing of things.

But if you are self-employed you may not know the income changes that will happen. Therefore it is very difficult to do.

Also, in a situation where income is definitely falling from one year to the next, you cannot get an income-related overpayment by waiting until the end of the year. In fact the only way to get an income related overpayment by waiting until the end of the year is if your income rises above £5000.

OP - i would give a conservative estimate, just be aware of potential overpayments if it is too low.

IQ

ontrack

If you are self employed try to do a dummy run of accounts after the first 6 months that may give you enough info to correct the tax credit payments in the first year.

ijrwe

hmm
The application form is actually quite strange. It asks for current working hours, current employer details etc. but only last year's earnings.

*shrug*

Caz3121

as has been said, that is what you complete and send then when you get the nil award you call and give an estimate of this years income

ijrwe

Caz3121 wrote: »

as has been said, that is what you complete and send then when you get the nil award you call and give an estimate of this years income

Yea, I get it - it's just a bit odd.

borderline

If someone , a single person, earns just above £13,000 still won't qualified for any tax credit for the 13-14 tax year, despite earning £5000 less a year than the 12-13 tax year?

borderline

blondebubbles wrote: »

There is a £5000 disregard if your income increases.

My income has decreased nearly £5000 a year. But I read that if you earn above £13000 you still don't qualify , right?