Jump in income half way through year Tax Credits

UKSBD

We are currently claiming child tax credits for this year.

Claiming as couple
Joint income approx. £1,500 a month
2 children

From next month our joint income will rise to over £3,000 a month.

I assume this will mean we are no longer eligible for child tax credits and they will stop?

What happens to the tax credits we have claimed from April to September though, do we have to pay all this back? and if so, does it all have to be paid back as a lump sum?

HappyMJ

UKSBD wrote: »

We are currently claiming child tax credits for this year.

Claiming as couple
Joint income approx. £1,500 a month
2 children

From next month our joint income will rise to over £3,000 a month.

I assume this will mean we are no longer eligible for child tax credits and they will stop?

What happens to the tax credits we have claimed from April to September though, do we have to pay all this back? and if so, does it all have to be paid back as a lump sum?

You may need to pay it all back and it's a stupid quirk of tax credits that I've never liked. It's based on your annual income and the amount they give you each week is provisional. You could end up in a lot of debt if you start spending all of your income not realizing what you've already been given is only a provisional figure.

angela110660

Quite a few years ago we claimed them but nearly at the end of the tax year OH got a bonus at work. Consequently, when the next tax year started we had to pay back previous payments which they allowed us to spread out over the year. After that we cancelled the payments as although we would have been entitled for the majority of the year, the chance of another bonus blew it all away. Was not worth the hassle to us.

UKSBD

blondebubbles wrote: »

It depends on the income for last tax year compared to this tax year.

What was the household income last year and what do you expect it to be this tax year?

Income for 2014 - 2015 was approx. £18,000


Income for 1st 5 months of this year approx. £7,500
Expected income for full year (2015 - 2016) approx. £31,000

UKSBD

HappyMJ wrote: »

You may need to pay it all back and it's a stupid quirk of tax credits that I've never liked. It's based on your annual income and the amount they give you each week is provisional. You could end up in a lot of debt if you start spending all of your income not realizing what you've already been given is only a provisional figure.

Yeah, I've pretty much allowed for the fact I will have to pay it all back, just not sure if it has to be paid back as a lump sum (and when).

UKSBD

blondebubbles wrote: »

As tax credits disregard the first £5000 of an increase in income, you'll be treated as earning £26,000.

On that level of income you would still be entitled to some TC for this year but how much would depend on working hours for you both, if any childcare, disabilities etc.

So, if I report change in circumstance now.


My tax credits will stop from now on, and they will work out if I have been overpaid at the end of the year?

pollyanna24

I think they will just do a recalculation on your income from now. It's best to tell them sooner rather than later, so they don't overpay you by too much.

I'm in a similar situation as I'm going from 4 days to 5 days at work which will push me over the amount where I will get anything. I haven't told them yet (as I haven't gone back to full time work yet), but I have worked out my income for 2105/16 as opposed to 2014/15 and it will be significantly more (bout £12,000), so I am just keeping it in my head that I will have to pay some money back when I tell them!

I am also currently paying back an overpayment that was incurred when I was with my ex. This is spread over 10 years as at the time we had just split up and I was on maternity leave and couldn't afford to pay much back.