Tax Credits...What to do?

lulu83_2

Hi guys,
Could really do with some help....im new to tax credits! I had a baby in May 2012 and called tax credits with my estimated earning for 12/13...£9100, which is correct!(full maternity of 39 weeks within the tax year) I returned to work and my income is 18500 as i returned to work. I am getting slightly worried now as i now believe that i will owe money due to me believing that it is based on the previous years income. I returned to work as full time and went off sick due to depression. ft wage 21600. In the process of doing so i did not change my hours to part time as intended beforehand as my head was not in the right place. Having returned to work my new salary on pt hours is 12900. I changed my hours to part time upon returning from sick leave so the majority of the year is showing as ft on a salary of 21600. I am feeling a bit sick to be honest at what is going to happen here. I cannot understand the 10k disregard etc....can anyone help me please?!

Caz3121

the disregard is £5k

In brief, if they base your tax credits on the previous years income (and not an estimate you have supplied) you can earn that figure + £5k and there would be no overpayment.
If you earn more than £5k more than the previous year then there will be an overpayment

If they have not based the payment on the previous years income and have used an estimate that you supplied then there is no overpayment, so anything earnt over the estimate will result in an overpaymen

Icequeen99

So your 12/13 income was 9,100. What do you actually expect your 13/14 to be in total taking into account our sick leave and the new part time hours?

IQ

lulu83_2

Hi caz and icequeen thank you so much for your response. My income for this tax year will be approx. £18800, as i was technically full time for majority of the year. With my new part time hours it will be £12800 approx...i am panicing now that they will not pay me tax credits on my new part time wage which works out at 900 per month. Please help i am so confused by all of this. i am a single parent and i cannot work full time due to childcare.

lulu83_2

Sorry im sounding a bit thick i know but i should then take this years figure of 18800 and deduct my last years figure of 9100 whilst i was on maternity and then deduct a further 5k of disregard? meaning ive earned a further £4700 which will lead to an overpayment? does this mean that they will not give me any further tax credits on my new part time wage until the next tax credit renewal in 2015? ah what a mess?

Caz3121

lulu83 wrote: »

Hi caz and icequeen thank you so much for your response. My income for this tax year will be approx. £18800, as i was technically full time for majority of the year. With my new part time hours it will be £12800 approx...i am panicing now that they will not pay me tax credits on my new part time wage which works out at 900 per month. Please help i am so confused by all of this. i am a single parent and i cannot work full time due to childcare.

Tax credits are based on annual income so if this year you will be £18,800 and next year £12,800 they will ignore the firs £2.5k of the decrease (the disregard for increases in £5k and decreases £2.5k) so will base your award on £15,300

lulu83_2

Thanks everyone, that helps a lot!! Should i call tax credits and let them know of this now or just wait until the renewal?

lulu83_2

Thanks for that blondebubbles, I assume that they will just stop any tax credits for rest of tax year? Does the 5k disregard only take affect if you tell them prior to your renewal...during the tax year?

lulu83_2

Would it not stop as I have received too much tax credits? Im sorry again, this just really confuses me

lulu83_2

No I haven't gave them this at all which is why I am in a panic!

lulu83_2

No BB....I didn't think I had to advise them about any changes until I completed renewal. They never asked me about anything on telephone. I am now petrified as they have technically been basing payments on 9100, which was correct for last year as I was on maternity but it jikes way up as I returned to work!