Tax refunds in DRO

alltaken

Since starting a DRO my partner has been getting sporadic income tax refunds from her employer. That's all well and good normally, but given the no surplus of £50, she is worried for future months ahead.

What's the general rule of thumb with this and how do most deal with their clients getting Tax Refunds through the DRO? What does it mean to a persons budget?

The greatest is £98 in one month so far, and hopefully after April no more will be received, however, if anymore refunds do come in will it cancel the DRO, would any refund have to be allocated to something like an increase in budget? If the refund can't be allocated to anything??

It seems like a really poor system and the IS haven't thought it through, I doubt an accountant could predict HMRC's refund through the current year system and stay within the £50 surplus.

Can my partner run a negative income vs budget? To account for any possible refunds? What's best here?

Many thanks!

wba31

Tax refunds would not be classified as an income (therefore counting towards the £50 budget surplus limit) rather an asset, so count towards the £1000 limit. If more than £1000 was received during the 12 month period it would need to be proved that this money isn's sat in an account, but that some has been used to purchase essential items, kids clothing, new washing machine or fridge freezer because the old one is done etc. If she doesn't get over £1000 back then it shouldn't be an issue (providing there were no other assets declared

fatbelly

I think it would count as a lump sum asset. As long as that does not take you over the £1000 asset limit you would be OK.

But you are required to 'Inform the Official Receiver of any property or increases in income that they receive whilst subject to the DRO moratorium period. For example lump sum (cash) payments, PPI refunds, tax rebates, other windfalls, property and money left in a will'