Awarded Working Tax Credit......now worried

elfieb

Long story, so I'll try and keep it as consise as possible.

I didn't work, claim benefits for 18 months due to a a period of ill health. I started claiming income based JSA in April 2014 and signed off when I started my job in August. I earn £16k per annum and when signing off the job centre advised me to apply for Working Tax Credits, so I did.....

I have yet to receive any letter or documentation from HMRC, but my bank account has been credited.....now I'm worried!

I earn more than £13k per annum so by my theory the job centre should not have advised me to apply let alone HMRC grant it!

I'm extremely concerned as I don't want to be hit with a massive overpayment demand..... Help!

elfieb

I was supported by my family whilst I was unwell....

I may be wrong, but I don't think it asked me on the application form what my current salary is? I remember it asking for my work details, payroll number etc, but not salary....

Oh dear, I think I've got myself into a right pickle.....

elfieb

From August 2014 to April 2015 I expect to earn £10368 after tax.

(New job started August 2014 earning £16k per annum)

Icequeen99

elfieb wrote: »

From August 2014 to April 2015 I expect to earn £10368 after tax.

(New job started August 2014 earning £16k per annum)

Tax credits use gross income figures, before tax is deducted.

So you need to make sure that is the figure you give them.

IQ

ernie-money

blondebubbles wrote: »

When your income increases from one year to the next, the first £5000 is disregarded.

Do you know why this is the case at all? Sorry to go off topic, but I don't understand why this happens...
Surely when your earnings increase, that's a bonus in itself. Then you get extra tax credits as if you earned £5000 less as well, and the following year, that would be taken off you - I know that's how it works, but I just can't see the benefit in doing that?

Indie_Kid

I was going to ask if you meet the criteria for the disability element of tax credits. The cut off point is slightly higher for a single person.

ernie-money

blondebubbles wrote: »

I don't know. You'd have to ask someone who make the rules.

Sorry - I didn't mean it to sound like an attack if it did, I just find it such a strange rule, and thought you sounded like you might have known the thinking behind it!

ernie-money

blondebubbles wrote: »

None of the tax credit rules make sense.

I know how it works but not why it works.

In some ways it benefits the claimants but in ithers it doesnt. There doesn't seem to be any logic behind it.

Madness isn't it! Will the Universal credit system be based on the same weird and wonderful structure, or will there be more logic when that takes over..?

DigForVictory

From eavesdropping, less.
The known flaws were pointed out. A decision was made to go ahead with An Entirely New system, which was not designed to deal with the known weaknesses.

HMRC as a corporate entity is made up of lots of individual bits, some amalgamated, some squished. Expecting logic is (almost) unreasonable. I wish they'd try it, but I gather legislation prevents...

ernie-money

DigForVictory wrote: »

From eavesdropping, less.
The known flaws were pointed out. A decision was made to go ahead with An Entirely New system, which was not designed to deal with the known weaknesses.

HMRC as a corporate entity is made up of lots of individual bits, some amalgamated, some squished. Expecting logic is (almost) unreasonable. I wish they'd try it, but I gather legislation prevents...

Sighs...
Here's to hoping I won't ever need to claim tax credits again...

zagfles

ernie-money wrote: »

Do you know why this is the case at all? Sorry to go off topic, but I don't understand why this happens...
Surely when your earnings increase, that's a bonus in itself. Then you get extra tax credits as if you earned £5000 less as well, and the following year, that would be taken off you - I know that's how it works, but I just can't see the benefit in doing that?

It's to stop overpayments. When tax credits first came out, the income increase disregard was only £2500. This resulted in people getting payrises/new jobs/partner starting work etc and them ending up being massively overpaid because they hadn't told HMRC, and there was no automated way of adjusting tax credits with income (as there is for instance with income tax via PAYE).

It wasn't always the claimants fault for not telling HMRC either - in cases like when people start a claim part way through the tax year, or where they lose a job then find another one 6 months later overpayments could occur through no fault of the claimant.

This resulted in bad headlines in the tabloids about overpayments, so to "solve" this problem inherant in the design, Gordon Brown decided to massively increase the disregard to £25,000. There was no income fall disregard at the time, which opened the system up to abuse eg by people making big pension contributions in alternate years and getting close to 100% relief.

Since then this govt have lowered the disregard down to £10,000 then £5,000, and introduced an income fall disregard, and instead tried to go for a real-time link up with earnings (RTI), which doesn't seem to be working properly yet.

Personally I think if they just paid tax credits via PAYE it would fairly easy and far less error prone, and far less likely to result in overpayments - but they won't do it because apparently it's very important that CTC is paid to the "main carer", since the main earner will obviously spend it all on booze and fags.