Jump in income next year - do I tell tax credits

wolvoman

My income will move from approx. £19,000 in 2016-17 to about £48,000 in 2017-18.


Presumably my tax credits will continue to be paid at the same rate as now, until my annual tax credit return is done around June/July?


But even after that, won't I still continue to receive TCs at the existing rate?


Do I need to tell HMRC or can I keep receiving TCs, use them to offset my mortgage and then pay them back at the end of tax year 17-18?

Darksparkle

You should notify tax credits when the tax year starts on 6th April (or as close to that date as you can).

Your tax credits will not remain the same, the first £2,500 of the increase will be disregarded so your claim will be recalculated based on an income of £45,500

BJV

Nice!!! after just having to pay my tax bill with another massive one due in July so pleased to see that the you will be able to use a credit meant to help people work to pay off your mortgage. Like an interest free loan. Nice one!

Alice_Holt

Yes, you need to tell HMRC.

https://www.gov.uk/changes-affect-tax-credits/overview

"You could be fined up to £300 if you don’t report certain changes within 30 days and up to £3,000 if you give wrong information carelessly or on purpose.......

........You should also tell the Tax Credit Office as soon as possible if your:
income changes - tell the Tax Credit Office immediately if it goes up by £2,500 or more"

xylophone

Nice!!! after just having to pay my tax bill with another massive one due in July so pleased to see that the you will be able to use a credit meant to help people work to pay off your mortgage. Like an interest free loan. Nice one!

The OP had a cunning plan in place.....post 9

https://forums.moneysavingexpert.com/discussion/comment/70955671#Comment_70955671

Alice_Holt

Nice spot xylophone.

"To confirm I just received a cheque for underpayment of tax credits in 2015-16 of over £6,000.

I used an 85% salary sacrifice to my company pension to achieve this.

The tax savings are phenomenal.
My pension pot was boosted by nearly £100k in just 1 year (I had some carry over allowance).
But it only cost me a loss of about £45k in take home pay.

AND the government gave me back £200 for married couples allowance.
AND they gave me over £6k in tax credits.
AND they allowed me to keep child benefits worth another £1,700.

And it's all perfectly legal "

Posted Mr Wolvomam in July 2016.

It goes without saying that this is a misuse of the legislation, it may be "legal" but it's certainty not what TC's are designed to do.
But, I guess it's the same mentality as those who flock to tax avoidance schemes.
As long as other taxpayers are paying for their children's education, their access to the NHS, the infrastructure, roads etc whilst the OP boosts his own personal wealth and pensions.

Let's hope his kids have a stronger sense of their moral and social obligations, otherwise Mr Wolvoman may have a lonely retirement. With his kids squabbling over how best to inherit fathers considerable pension assets!

midnight_express

Tax credits are the biggest farce ever.

wolvoman

Alice_Holt wrote: »

Yes, you need to tell HMRC.

https://www.gov.uk/changes-affect-tax-credits/overview

"You could be fined up to £300 if you don’t report certain changes within 30 days and up to £3,000 if you give wrong information carelessly or on purpose.......

........You should also tell the Tax Credit Office as soon as possible if your:
income changes - tell the Tax Credit Office immediately if it goes up by £2,500 or more"

That's pretty clear, thanks - a helpful post.

wolvoman

Alice_Holt wrote: »

Nice spot xylophone.

"To confirm I just received a cheque for underpayment of tax credits in 2015-16 of over £6,000.

I used an 85% salary sacrifice to my company pension to achieve this.

The tax savings are phenomenal.
My pension pot was boosted by nearly £100k in just 1 year (I had some carry over allowance).
But it only cost me a loss of about £45k in take home pay.

AND the government gave me back £200 for married couples allowance.
AND they gave me over £6k in tax credits.
AND they allowed me to keep child benefits worth another £1,700.

And it's all perfectly legal "

Posted Mr Wolvomam in July 2016.

It goes without saying that this is a misuse of the legislation, it may be "legal" but it's certainty not what TC's are designed to do.
But, I guess it's the same mentality as those who flock to tax avoidance schemes.
As long as other taxpayers are paying for their children's education, their access to the NHS, the infrastructure, roads etc whilst the OP boosts his own personal wealth and pensions.

Let's hope his kids have a stronger sense of their moral and social obligations, otherwise Mr Wolvoman may have a lonely retirement. With his kids squabbling over how best to inherit fathers considerable pension assets!

A not so helpful post.


My social obligations are quite clear.


I am following standard tax planning using a government-approved scheme to minimise taxes and to maximise pension savings. It can only be done for a short period (mostly because I run out of savings!).


As to contributing to services such as the NHS, I am confident my overall tax contribution since birth, far outweighs the value of services I've received.
Indeed a further £70k was donated by me recently, simply because I had the temerity to move house.

xylophone

As to contributing to services such as the NHS, I am confident my overall tax contribution since birth,

If you were a taxpayer at birth then you were indeed privileged....:)

far outweighs the value of services I've received.
Indeed a further £70k was donated by me recently, simply because I had the temerity to move house.

This would be difficult to prove....and apart from that, what about services received by your parents/ your children....

And if £70,000 was paid then clearly you can afford a high value asset so the question may legitimately be asked, are TCs appropriate?

And apart from all that, "From each according to his ability, to each according to his need":)

That said,

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.

It'll run and run......:eek:

wolvoman

xylophone wrote: »

If you were a taxpayer at birth then you were indeed privileged....:)



This would be difficult to prove....and apart from that, what about services received by your parents/ your children....

And if £70,000 was paid then clearly you can afford a high value asset so the question may legitimately be asked, are TCs appropriate?

And apart from all that, "From each according to his ability, to each according to his need":)

That said,

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.

It'll run and run......:eek:

Good points.
The way tax credits are administered leaves them wide open to good tax planning.

Value of assets is not relevant, tax credits are fully income based.

No one willingly pays more in tax than they should.