Tax Credit Advice

hovis123

Right, I need somer advice regarding tax credit. I am currently repaying 1100 over payment from two years which I came to a arrangement to pay £10 a month over next X years.

Me and my wife applied last year for tax credit and we got just over £1200 tax credit based on joint income of £36,000, the problem is because money was a bit tight last year I ended up doing a lot of overtime. I looked at my P60 last month and I noticed that with the overtime our joint income is around £42,000. When I renew my tax claim do I include the overtime as though it is not gurateeed or is it based on what you earn. Also what is the spine backets in tax credit does it change every £5000 i.e because I have earned an extra £6000 do will I owe more money back to the Tax office again. I remember reading something about the changed it to £20000.

To add to my problems when I joined my new company over year and half ago the hadn't changed my tax code so I have been paying basic tax for all that time so I need to notified the tax office about that.

kelloggs36

Tax credit awards are based on the previous year's income. If you give the details of what you earned last year it will be adjusted this year, so if you earn less this year, it will go back up again next year.

There is a 25k disregard, but obviously this will only apply if it doesn't take you to the limits which apply based on earnings. Sorry I can't be more specific but it is impossible to tell what they will do sometimes as they don't always get it right!!

Pam17 or Gaz will know more.

petercarots

You wont get any extra overpayment, so long as your income for 2005-06 was 36k, because in that case, you could have earned up to 61k this year before your payments changed. This is due to the income disregard, which allows you to earn up to 25k more than the previous year without affecting your payments.

You do definitely have to include the income earned from overtime, as you have to report all taxable income, regardless of how it is earned, and not doing so would be illegal. What I suggest though, is that if you think you will earn less this year, ring the helpline to do the declaration over the phone, and have estimates ready for this year, as the advisors can enter these into the calculations.

There are no spine brackets in tax credits really, just incomes at which you cant get various entitlements anymore.

I'm assuming, from the amount of tax credits you recieved last year, that you have either a child under the age of 1, disability in the family, or childcare costs, as normally once your income goes above 25k, then you are entitled to 550(ish)(1 child element) per year. If this was the case, then you would still get 550 this year(as you can still get 1 child element, up to an income of approx 55k). If you were getting 1200 in tax credits, and the circumstances that created this amount still exist, then the payments may go down a little.

Gaz83

On your TC award notice, it will say what income your award is based on and what you are allowed to earn up to before it's affected.

Have a look at it, and if your income hasn't gone over that threshold, you shouldn't have an overpayment.

And yes, you do need to include overtime payments all the time.