P60s will incorrectly stop Child Tax Credits - Can I prevent this?

Stroller133

We have 3 children and receive Child Tax Credits. I informed HMRC of our expected income last May when our third child was born and it's looking like it will probably be about £500 less than my estimate, so this year's award once finalised will be about right, but if anything we will be slightly underpaid.

The problem is that I'm expecting Tax Credits to get back our P60 data before renewal takes place. The P60 values will be 1000s more than our correct income as my wife is on maternity leave so can take £3900 off and I get expenses paid as salary and we also have gift aid donations that I know can be taken off my P60 as income for tax credits. Therefore I'm expecting our payments to stop and our renewal pack will say we were overpaid.
I realise once we submit the correct data it will correct and our remaining 16/17 payments will be higher but we could without the few months with either no or very low payments.

My question is can I call HMRC and explain our P60s will not be our finalised 15/16 income and get interim payments based on my estimated correct income and our 16/17 estimates?

Thanks for any advice.

Darksparkle

Shouldn't take a few months.

Your employer should not be including non taxable expenses in your salary or your P60.

As for what income they will base it on really depends on figures due to the income disregards. It would be easier to explain if you could provide the figures.

dippy3103

Dark sparkle.. Is that the case? That gift aid donations are taken off income on P60's for tax credits? I have made gift aid donations and have only had to confirm I am a uk tax payer. Asking as I'm curious, no other reason. Thanks

Darksparkle

dippy3103 wrote: »

Dark sparkle.. Is that the case? That gift aid donations are taken off income on P60's for tax credits? I have made gift aid donations and have only had to confirm I am a uk tax payer. Asking as I'm curious, no other reason. Thanks

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/419539/TC825.pdf

comeandgo

Dark sparkle have you missed out the not in your first response? The employer should not be including expenses in salary or P 60,s though I have seen it in salary but as a non taxable item so it does not get included in P60 figure.

Darksparkle

comeandgo wrote: »

Dark sparkle have you missed out the not in your first response? The employer should not be including expenses in salary or P 60,s though I have seen it in salary but as a non taxable item so it does not get included in P60 figure.

Yes. . .im tired.

Stroller133

Last year our renewal pack came in early July. The initial award used my P60 value for 14/15. Our actual 14/15 was less and used for final award which we received in August, so 5th month of financial year. My employer pay me an allowance for a car, subject to tax & NI (& student loan) and hence included on my P60. I then get 10p a mile fuel, the Authorised rate is 45p so for each mile I can reduce my income by 35p as its an allowable expense for which I'm not fully reimbursed.

Stroller133

Darksparkle wrote: »

Shouldn't take a few months.

Your employer should not be including non taxable expenses in your salary or your P60.

As for what income they will base it on really depends on figures due to the income disregards. It would be easier to explain if you could provide the figures.

I understand the disregards quite well and I know what my award should be in 16/17. My concern is the interim payments will be lowered as HMRC will see our P60s assume we underestimated our 15/16 income by about £7k and apply repayments to next year's interim payments, which consequently will also be reduced as our estimated 16/17 income will be subject to a £2500 uplift due to an apparent decrease.

Actual corrected joint incomes:

13/14: £27k
14/15: £34k
15/16: £29.5k
16/17: est 29k

So 16/17 award should be based on £29.5k, but will initially be based on 32k as initial renewal figures will show 15/16 as £36.5k. They will also assume we were overpaid in15/16 and reduce payments to recover overpayment. One thing that will offset this is 15/16 will be provisionally finalised using £34k as £36.5 is within £5k.

Stroller133

dippy3103 wrote: »

Dark sparkle.. Is that the case? That gift aid donations are taken off income on P60's for tax credits? I have made gift aid donations and have only had to confirm I am a uk tax payer. Asking as I'm curious, no other reason. Thanks

You don't tell the charity. In fact you gross up the donation and deduct that amount from earnings.

Example you donate £100 - this is £100 * 1.25 = £125

WYSPECIAL

Do you have to provide any evidence of gift aid donations? Some, such as National Trust membership, will be easy to prove but for others you just tick a box to confirm you pay UK tax and provide your address when you make a donation. You don't get a receipt

Darksparkle

Stroller133 wrote: »

I understand the disregards quite well and I know what my award should be in 16/17. My concern is the interim payments will be lowered as HMRC will see our P60s assume we underestimated our 15/16 income by about £7k and apply repayments to next year's interim payments, which consequently will also be reduced as our estimated 16/17 income will be subject to a £2500 uplift due to an apparent decrease.

Actual corrected joint incomes:

13/14: £27k
14/15: £34k
15/16: £29.5k
16/17: est 29k

So 16/17 award should be based on £29.5k, but will initially be based on 32k as initial renewal figures will show 15/16 as £36.5k. They will also assume we were overpaid in15/16 and reduce payments to recover overpayment. One thing that will offset this is 15/16 will be provisionally finalised using £34k as £36.5 is within £5k.

If the system shows 2015/16 as £36,500 and 2016/17 as £29,000 (estimated) then the claim will initially be based on £31,500 (£29,000 + £2,500).

They cannot override this and pay based on £29,500 because of the disregards. These are automatically applied by the system.

It can only be based on £29,500 once the renewal is processed.

Whether they assume there is an overpayment for 2015/16 depends on what the 2015/16 estimate is they currently hold.