Tax credits due to reduce considerably

thehistorygirl

I'm just going through some paperwork and have just dug out our tax credits award notice for the year 2013/14. According to HMRC for the next tax year 2014/15 our tax credits are due to go down firstly by £70 a month and the by another £100 from August. My DD is 16 but will be staying on in full time education after her GCSEs. When I punched our figures into both the entitled2 and turn2us calculators the figures actually are projected to come out as roughly the same they are now. The calculators give figures of between £4994 and £5100 but looking at the projected payments, even assuming my daughter is added back in, HMRC are going to be paying about £3600. I am paying back an overpayment, which is being taken out at about £33 every four weeks. As at the end of this year the amount outstanding is £1100. I can't believe they'd reduce our payments to get all that back in one year though.

I'm thinking that they have worked out their projected figures based on DD leaving education and averaging the award out over the year, but giving us slightly more from now until August whilst she is still in school. Please reassure me that this is the case otherwise I'm going to be up s*@t street! Just started a DMP so all outgoings are now finely honed. If the worst comes to the worst, I guess this will have to be reduced to reflect the lower income. I work 14 hours a week and DH works 40 and our combined income for next year is going to be roughly £20.5K with two DC, 16 and 14.

Not sure whether to call them or not as I've just rung the Child Benefit office and they told me that tax credits cannot be updated to reflect 16 year olds until 17th April. Trouble is, my tax credits are due next week at the lower rate which is going to b@lls up my budget for next month completely. I just cannot understand where they have got their figures from.

davehughes182

What Child Benefit have told you is correct. TC can not be updated with education details until after 17/04/14. Unless anything else such as income or work is changing you would need to wait until 17th April to inform them of the change.

thehistorygirl

Yes I do - 12/13 was £18850 and 13/14 will be about £20500, a difference of £1650. Are those online calculators accurate? I've put all the correct figures in for last year and this year and its way out on what HMRC are saying. I did ring them in the end earlier, but the guy at the end of the phone couldn't understand what the problem was - as far as he was concerned the payments from August would go back up to reflect DD staying for A-levels, but he didn't give an explanation for the reduction from April.

zagfles

davehughes182 wrote: »

What Child Benefit have told you is correct. TC can not be updated with education details until after 17/04/14. Unless anything else such as income or work is changing you would need to wait until 17th April to inform them of the change.

I'm surprised they can be updated that early! Don't you have to wait till August when the results are in and a place is confirmed at college/sixth form?

zagfles

thehistorygirl wrote: »

Yes I do - 12/13 was £18850 and 13/14 will be about £20500, a difference of £1650. Are those online calculators accurate? I've put all the correct figures in for last year and this year and its way out on what HMRC are saying. I did ring them in the end earlier, but the guy at the end of the phone couldn't understand what the problem was - as far as he was concerned the payments from August would go back up to reflect DD staying for A-levels, but he didn't give an explanation for the reduction from April.

The £1650 rise will reduce tax credits about £676. When in August is the payment made till - they'll be paying on the assumption you won't get anything for your 16 year old after 31 Aug. Are you paid weekly or 4-weekly? If 4-weekly then you might get 6 payments before 31 Aug and 7 payments after, but the propotion of the year you're entitled to payments for your daughter if she leaves education are less than 6/13th, so might be why the payments are lower from April.

zagfles

blondebubbles wrote: »

Some children may know what they are doing irrespective of their results. When I was 16, I knew I was staying on at school as I would have only been going into my 5th year.

You can always update it then change it again if intentions change.

Thanks - so are you saying TCO update the records in April even if it isn't certain the child will carry on in education (eg if they're offered a place in sixth form dependant on grades?).

thehistorygirl

OK - at the moment I get £373 per month less £33 overpayment which means £340 is paid every 4 weeks into my account. From the new tax year next week the payments are going to be £277 every 4 weeks. Even putting this years upped income figures into all the online calculators shows a payment of roughly the same as this year (£95 - £100) a week. Ignoring for the moment that DD is 16 and payments will go down until this is updated, £277 x 13 payments in a year is £3601. Putting a figure of £20500 which is this years income into the calculators gives a yearly amount of £5100 ish. Even if they took all the overpayment off me in one year it is still less than the benefits calculators show. I'm pretty good at working back from figures but this has flummoxed me completely. I just cannot see how it can be so different.

thehistorygirl

I think I'm only paying 10% towards the overpayment at the moment -£370 less £33. I think I'll have to ring them again once the new tax year starts as it may be that they've upped the repayment on the overpayment. I have to say they the award notice is very vague on how much I will be paying each month to clear this. Its only when I rang earlier that they told me it was £33, the award notice just gives a figure of how much has been taken so far and how much is still to be taken.

I'll make sure I fill in the renewal promptly this year and maybe it will work itself out with the updated income.

thehistorygirl

Total award for 13/14 was £5694.31. I've been repaying the overpayment since July as I didn't return the form very quickly last year (OH worked for a shoddy bunch and we didn't get his P60 very speedily - thankfully he's not there anymore!). So, since then I have repaid £370.13 for this year. I'm definitely not repaying as much as 25% of my award though. I'm guessing now that that is what will be happening from this year which may be where the confusion lies.

thehistorygirl

At least it will be paid off within the year if that is the case though. One less debt to worry about