Tax credits disregard and pension contributions

blanik

Very rough figures but my Daughter's income is:-

2015/16 - £13000
2016/17 - £11000
2017/18 - £11000

She was receiving tax credits in 2015/16, but for 2016/17 they have stayed the same because of the £2,500 income disregard, so still based on earnings of £13,000

For 2017/18 her tax credits will go up due to lower income.

If she made a one-off AVC pension contribution ( she is now in an employers pension scheme ) for £500 gross in 2016/2017 would that trigger a recalculation at the end of the tax year when she provides the actual figures?

Darksparkle

The 2016/17 claim would still be based on the 2015/16 income because of the disregard. £10,500 + £2,500 = £13,000

blanik

Darksparkle wrote: »

The 2016/17 claim would still be based on the 2015/16 income because of the disregard. £10,500 + £2,500 = £13,000

Sorry - perhaps my figures were too rough.

So if I made it £501 AVC would that then have a reduction of £2501 and trigger the re-calculation.

Caz3121

blanik wrote: »

Sorry - perhaps my figures were too rough.

So if I made it £501 AVC would that then have a reduction of £2501 and trigger the re-calculation.

the first £2,500 of a change is disregarded so if the figure dropped to £10,499 tax credits would be based on £12,999 rather than the £13,000