Big salary drop... entitled to Tax Credits from October?

productof80s

Hi,

I currently earn about 25k so a decent salary, for many reasons I am changing my job, to spend more time with family and be able to help out more.

My new salary could be 14.3K a year so a big drop but we have worked out it will be doable with tax credits.

My partner is back at work within October and will work 16 hours a week and will have my salary 14.3k.

£19,702 will be the annual household income from then, so what I am saying is,

1. If i change jobs and are on that salary AND
2. If my partner earns her amount (5.4K) a year totalling 19.7K

Will we be entitled to tax credits from October

Somebody said it was based on last years salary which will mean entitled to nothing but because the salary drop is substantially more than 2.5K I presume we are entitled to it?

According to the tax calculator a £19,702 household income with my partner working 16-20 hours a week and me 37+, and with one child, we are entitled to £49.47 a week which is child tax credit?

Can someone just confirm this is correct i.e- if that is our household income from when we want to claim from, will we receive that amount? and will it be affected by our PREVIOUS much higher annual household income?

Thanks a lot

Mr W

Caz3121

A couple of important points
1) If you were to change jobs in August, your income for this tax year will include 4 months of £25k salary and 8 months of £14.3k so that is approx £17.86k
2) If your wife is earning £5.4k per year then her income for this tax year will be around half of that if she is not starting till October
3) the first £2.5k of a decrease in income is ignored

Your claim would originally be based on last years income and would likely be a zero award but when you receive that you can call to give them your estimate for this year which would mean your claim would be based on an income of around £23k (income around £20.5k plus the £2.5k disregard) so you should get approx £25ish a week

productof80s

Hi,

Thanks for reply. The tax calculator I used said £49.47 a week on £19702 household income. I see what you are saying about the split in the salary over the tax year but that may not be enough money to live on.

Is there any way it will be closer to the £49.47 a week? or any way in which it can?


Regards

tinkerbellkirst

The OP above is right. This year itll be based on last years income but can alter if the drop is significantly less. However you will get an award as the OP states based on your end of year earnings for this year which will be a mixture of your higher and lower salary and your partner's income from Oct so will likely be around the £25 a week the OP states. From next April you would get the £49 a week.

Caz3121

productof80s wrote: »

but that may not be enough money to live on.

Is there any way it will be closer to the £49.47 a week? or any way in which it can?

If you gave too low am estimate for this year then you would get more in the way of tax credits but you would be required to pay the overpayment back so this would not help
If your salarie and tax credits rates do not change then you would fiind it will increase over the next couple of years

14/15 actual income £20.5, claim based on £23 due to disregard
15/16 actual income £19.7, claim based on £20.5 (as your actual income will not be more than £2.5k lower that the previous years
18/17 actiual income £19.7, claim based on £19.7 (as this is the previous years income)

As in my previous post you need to work out the total income for the full tax year. You do not mention if you have already changed jobs or when you plan to and whether your wife has had any income since April that would need to be included in the figures (then add £2.5k on and you will see what figure they use for the award)

productof80s

Hi,

Apologies the information isn't crystal clear.

I *should* be changing jobs (fingers crossed) from the beginning of November. My current salary is 26.4K so I will been paid that salary in April-October and my new job should start beginning of November either 14k or 15k.

My partners maternity pay is currently around £500 per month and she plans to return to work the beginning of October where she will be earning slightly less (around £451)

Tax credits can take up to 5 weeks to claim so If i get the Job I then have 3 months to sort it all, so say, mid August apply for them.

According to the previous calculations we will get £25 per week until April 2015? and then it will be the full £49.47 allowance?

Can somebody in Laymen's terms work this out, and how they came to the conclusion, also, if they are the figures we will be getting?

Kind Regards,

BW

amiehall

You should apply NOW if your earnings will drop later in the tax year. Give honest earnings and they will pay you nothing for the time being, then when your earnings drop, update the income and your payments will start up. Tax credits work on a whole tax year basis.

productof80s

Hi,

So even though my new job hasn't started (and suffered salary drop) and won't most likely start until November me and my partner should apply now?

Is there any benefits to not applying now or applying in mid August time?

I can see you point on the tax year- obviously by last year's income we will get nothing, but suggest applying and then when the date of new job is set in stone we contact them and give them amended figures for this year?

Kind Regards,

BW

stevemLS

OP this is not directed particularly at you but a general comment. I entirely accept that you are entitled to work within the system we have.

Is it only me that thinks some sort of sanction should apply to people who voluntarily, on lifestyle grounds, give up the means to support themselves and then seeks to rely on the state to prop up their living costs?

Caz3121

productof80s wrote: »

I *should* be changing jobs (fingers crossed) from the beginning of November. My current salary is 26.4K so I will been paid that salary in April-October and my new job should start beginning of November either 14k or 15k.

My partners maternity pay is currently around £500 per month and she plans to return to work the beginning of October where she will be earning slightly less (around £451)

So your income for this year will be (26.4k/12*7)+(15k/12*5)=£21.65k
Your wifes income will be £2.7k plus some negligible amount of Maternity pay (they ignore £100 per week of maternity)
This then gives you a total income of £24.35k

With the disregard of £2.5k they will base your award on £26.85k (assuming your joint income for 13/14 was higher than this) which would mean no child tax credits unless there is a disability or childcare costs

In April 15 they will look at your total income for 14/15 (say £24.35k) and initially base the award on that. Then you call them and ask for it to be based on your estimate of £19.7k, due to the disregard they will base your award on £22.2k so you should get a little help from April 2015 if the rates and income do not change.

The amount the calculator is showing is related to your income for the full tax year being £19.7k and not having been over £2.5k more than that the previous year so does not apply in your case

Takeaway_Addict

stevemLS wrote: »

OP this is not directed particularly at you but a general comment. I entirely accept that you are entitled to work within the system we have.

Is it only me that thinks some sort of sanction should apply to people who voluntarily, on lifestyle grounds, give up the means to support themselves and then seeks to rely on the state to prop up their living costs?

It is directed at the OP but I agree on principle but there are many various reasons as to why someone would take a lower paid job.

But this does just go and show supply and demand being altered by benefits. If there OP wasn't going to get another £200 a month from the government he would have gone for a higher paid job (16-17k) taking some of the supply away from the lower paid jobs which in the long run would increase the pay in these jobs.