Tax credits if income raises

Kayalana99

Hiya Guys,

Our income was low 15/16 because I invested a lot in equipment for my business so our tax credits are abnormally high this year - what I can't understand is it says we would end up owing the tax credits money if our income is to rise this year, when our award is based on our income for last year?

I just don't want to end up owing them money as we will be struggling next year more although at this stage I have no way of knowing what our income for 16/17 would be, but it will be at least 4k more then last year. So essentially we get paid this now, but then actually it's based on next years income as they will take any money paid back if we earn over what we have declared for 15/16?

Caz3121

have you given them a forecast for this years income. Tax Credits are based in last years income UNLESS this years income will be over £2.5k higher or £2.5k lower.
There is a disregard that means you are not affected by the initial £2.5k of increase/decrease but outside that would mean under/over payments.
Best to call and give them an estimate of this years income (overestimate if you want to reduce chance of overpayment) and they will adjust your award for this year

Darksparkle

If you think you will earn more this year you are expected to inform tax credits of the change.

The first £2500 is disregarded. So if you expect to earn an extra £4000 you'll be considered earning an extra £1500

Kayalana99

Thanks I will give them a call, I did it online so didn't give them a forecast for next year as it wasn't requested. No point us getting over paid if we will have to pay it back as I say, next year will be harder so the last thing we need is having a debt over our head.

Darksparkle

Wasn't there a section online about reporting a change in circumstances?

Kayalana99

Most likey I glossed over it because yes, we will have a higher income but this isn't due to me changing jobs or change of hours - it's because it's lower this year because of the equipment that was purchased + as I say I have no way of knowing how much I will actually earn this year but I would estimate at least 4k extra which would put us back to what we earned in 14/15.

I suppose you are most likey right in classing it as a change of circumstance but unless we earn more than 10k this year we don't have to tell them according to there rules, but it will be for the best.

Icequeen99

Darksparkle wrote: »

Wasn't there a section online about reporting a change in circumstances?

I always thought the online system couldn't take current year estimates as part of renewal - be good if someone who has used it could confirm.

IQ

Darksparkle

Icequeen99 wrote: »

I always thought the online system couldn't take current year estimates as part of renewal - be good if someone who has used it could confirm.

IQ

I'm sure someone said on here before that you could under the change of circumstances section of the renewal.