£5000 disregard

sorethumbs

As a couple we are possibly going to be earning about £4500 more than in the year 2014-2015. We've not declared it to tax credits as I believe there is no need as it will be under the '£5000 disregard'.


However just a bit concerned what this 'disregard' actually means.


Doe it mean we will be liable for paying back any overpayment during this current 2015-2016 year or is it what it says and is disregarded??


We understand we will get lower tax credit payments next year based on our higher income this year but would like to know if we'll get stung and have to pay money back

Darksparkle

Although it is disregarded, you must still report any changes.

If the change is less than £5000 from last year, your 2015/16 claim won't be affected.

Examples
1. 2014/15 £20,000 and 2015/16 £24,500.

Claim for 2015/16 still based on £20,000. No overpayment for 2015/16.

2. 2014/15 £20,000 and 2015/16 £30,000.

Claim for 2015/16 based on £25,000. Overpayment for 2015/16.

sorethumbs

Can I just get a second opinion on my original post as we are still a bit concerned.
My partner is earning the additional £4500 extra we will bring in this year through self employment (as an extra job). We have notified Tax Credits of the expected change in income and the circumstances. The man on the phone said even though our change will be less than the £5000 disregard figure it is possible we will be liable for any overpayment.

He said our payments will not change until the renewal but then overpayments may be claimed back either through a payment plan or a reduction in the amount we would get paid monthly.

So we are still really puzzled about whether we will have to deal with owing money back to Tax Credits due to the income increase.

Darksparkle

So not even a thank you but a request for a second opinion?

sorethumbs

Grateful thanks and humble apologies.

Sorry spinny head from working out figures

dippy3103

sorethumbs wrote: »

Grateful thanks and humble apologies.

Sorry spinny head from working out figures

In my opinion, you will not find anyone more knowledgable about tax credits on here than DarkSparkle, she (assuming she is a she) really knows her stuff.

sorethumbs

Yes and I do apologise.
Was just after some confirmation to put my mind at rest. Having done the tax credits questionnaire to see what we would get (as if we were claiming for the first time). The difference between what you would receive earning £20k seems a lot different to £24.5k. Wasn't looking forward to them saying we owe like £100 for every month this year.

nannytone_2

an overpayment may occur between april 6th ( start of the financial year) and when you renewal is complete, as from april, your income for the future year (15/16) will be used to finalise the april to april award ( 15/16) so i would ADVISE YOU NOT TO SPEND ANY OF THE TAX CREDITS THAT ARE PAID FROM APRIL ONWARDS UNTIL THE NEW CALCULATION IS COMPLETE

Darksparkle

Darksparkle wrote: »

Although it is disregarded, you must still report any changes.

If the change is less than £5000 from last year, your 2015/16 claim won't be affected.

Examples
1. 2014/15 £20,000 and 2015/16 £24,500.

Claim for 2015/16 still based on £20,000. No overpayment for 2015/16.

2. 2014/15 £20,000 and 2015/16 £30,000.

Claim for 2015/16 based on £25,000. Overpayment for 2015/16.

nannytone wrote: »

an overpayment may occur between april 6th ( start of the financial year) and when you renewal is complete, as from april, your income for the future year (15/16) will be used to finalise the april to april award ( 15/16) so i would ADVISE YOU NOT TO SPEND ANY OF THE TAX CREDITS THAT ARE PAID FROM APRIL ONWARDS UNTIL THE NEW CALCULATION IS COMPLETE

This won't be an issue if the change in income to the 2015/16 estimate is reported before April. If the OP calls before April to change 2015/16 to £24,500, that's the figure that will be used once the tax year starts. If they wait until the renewal then the overpayment would be in 2016/17, not 2015/16.

sorethumbs

OK let me put this to you out of interest because I'm still missing things obviously and being a bit dippy


I get my 2015-16 award based on 20k earned in 2014-15 and get awarded £150 a month for the child we have for the year 2015-16. I know I will start an extra job in say May 2015 and will earn £4000 extra.
If I earn 24k I would only get £50 a month for the child.


So how do they get back the £100 a month we have received extra

Darksparkle

sorethumbs wrote: »

OK let me put this to you out of interest because I'm still missing things obviously and being a bit dippy


I get my 2015-16 award based on 20k earned in 2014-15 and get awarded £150 a month for the child we have for the year 2015-16. I know I will start an extra job in say May 2015 and will earn £4000 extra.
If I earn 24k I would only get £50 a month for the child.


So how do they get back the £100 a month we have received extra

If your income for 2014/15 is £20,000 and 2015/16 is £24,500, your payments for 2015/16 will still be based on £20,000.

This is because your income hasn't increased by more than £5000.

The £24,500 won't be used until April 2016 (2016/17 claim). You need to tell them before April 2016 that you plan to earn £24,500 in 2015/16 so that you won't be overpaid in 2016/17.

You said earlier you use the tax credit questionnaire, this is of no use to you because it only asks for one years income, it doesn't ask for two years in order to calculate the income disregard.