Tax credits and stoozing?

silverbirch_3

I am in receipt of tax credits but also have £14000 of credit cards money on 0% in a high interest savings account. Now i don't regard this as my savings, i can't touch the money as it belongs to the credit card companies and i will have to pay it back when the 0% period ends. But how would the tax credit people view this, has anyone had any experience of there views on this?

CIS

I would guess it would be classed as savings as it money in an account that you have the availability to spend if you want,I wouldn't have thought that it mattered that it was to be paid back, a loan has to be and I would guess money from a loan in your bank account would be classed as savings.

irs101

HMRC wouldn't care because the amount of savings you have doesn't affect your tax credits. However the interest you get from your stoozed money would have to be declared as income.

irs

lush_walrus

Interest equals income, regardless of where the money originally comes from.

irs101

Oh, and of course the really clever thing to do would be to stooze your tax credits. At the beginning of the tax year report a really low provisional income to HMRC, get maximum tax credits and save them in your stooze account. At the end of the year report your actual income, and start to pay back your massive overpayment

I wouldn't recommend this unless you are really disciplined, but it works in theory (I haven't heard of anyone doing this) and probably entitles you to free prescriptions and things as well.
irs

surfcat

...and in the process screwing the workers. Remember that the 'taxman' is really a term used (mainly by vested interest financial journalists) to describe the treasury in a negative light. Screwing the 'taxman' really means screwing hard workers out of their income. If less people screw, then either more taxes can go to genuine good causes (schools, hospitals etc) or the tax burden can be reduced.

irs101

Well thanks for that insight :rolleyes:

I'm not suggesting "screwing" anyone, I'm only pointing out a way that someone can use the system designed by the "taxman" to their advantage. HMRC are always free to (and do) change the legislation if they feel a particular tax relief is not being used in the most productive way or in the way it was intended.

I also know lots of ways that people could and do rip-off tax credits and other tax reliefs (illegally that is), but I would never suggest doing anything like that on this forum.

Yesterday I suggested that people with childcare costs should claim tax credits rather than employer-provided vouchers, because it would save them money/tax. Is that wrong as well??? Where do you draw your line???

I really resent the implication that I have suggested something wrong here. This forum is about (legal) ways of saving money, and that is all I have done.

I come on here because I know I have a perspective on tax credits that only a handful of people in the country have. (That's not to say I know more about tax credits than others here, but I do come at it from a particular perspective backed up by previous experience). I do not come here to be accused of trying to "screw" other people. :mad:

silverbirch_3

I've not earned any interest yet as although accrued daily, its only paid annually on the account i'm using and as the amount in there has varied so much during the year i can't begin to work out what the interest will be lol.

It will definitely not be more than the £2500 buffer they allow you though so not really worried there was just concerned as i thought you were only allowed £3000 in savings before you had to declare it?

As for giving a low figure and stoozing my tax credits, no i don't think i'll be trying that one lol.

Thanks everyone.

irs101

I'm sure you know this, but it's the interest you receive plus any other income rise compared to last year that needs to be less than £2,500 for it not to affect your award.

For info, you need to report any interest you receive over £300, even if it is less than £2,500. So if you get £500 in interest, you report £200. This year's award will be unaffected, but you will be entitled to £74 less next year.

irs

Savvy_Sue

irs101 wrote:

Oh, and of course the really clever thing to do would be to stooze your tax credits. At the beginning of the tax year report a really low provisional income to HMRC, get maximum tax credits and save them in your stooze account. At the end of the year report your actual income, and start to pay back your massive overpayment

I wouldn't recommend this unless you are really disciplined, but it works in theory (I haven't heard of anyone doing this) and probably entitles you to free prescriptions and things as well.
irs

But if you KNOWINGLY underdeclared your income for this purpose, would that not be fraudulent? Especially if you were claiming free prescriptions etc?

I mean, none of us knows for certain what our income will be for the year ahead, but since my DH and I are not planning to reduce our hours at work, aren't expecting to lose our jobs, and I'm definitely not having any more babies, we have a fair idea of our anticipated income for the year ahead, barring disasters.

Personally I think this would be a very dangerous thing to do unless you really don't know what your income for the year ahead will be, in which case by all means do an underestimate, but make sure you put plenty aside from yourTC to cover the shortfall in your income from TC next year if your income is more than you expected! It sounds like too complicated a gamble for my brain to get round ...

Phonix

How exactly do they know your income? Are they able to search all your banking records etc?