Child Tax Credit Help with increase by more than 2500

Zayats

Hi all,

I wonder if you can help.

My 2016/2017 Child Tax Credit was based on a salary of £18700.00 from previous year. My annual salary for 2016/2017 has gone up to £19500.00 however due to a new contract we have had temporary overtime for the period October 16 to April 17. Therefore I have boosted my salary by around an extra 450.00 a month pre tax from October onwards. I anticipate by year salary pre tax will be around 22000.

I am kinda panicking as this overtime is temporary only however I am worried incase my 2017/18 award will be reduced due to my increase this year.

I read somewhere that if your salary goes up by more than £2,500 compared to your 2015/16 income, your final tax credit award will be calculated using your 2016/17 income minus £2,500. Does anyone know if this is definitely the case and does this effectively mean that my tax credits would be calculated on a salary of around £19500 as opposed to £22000.00 after the minus of £2500.00?

Also will I be in any trouble for not reporting the overtime to DWP as it raise my salary just over the £2500.00 threshold? The overtime has been a rolling situation, therefore it was not definite that it was going to continue and it has only just been confirmed that it will end in April therefore I did not anticipate breaching the £2500.00 threshold until now.

Thank you for any help, I am stressing myself about this.

Darksparkle

The 2016/17 claim would be recalculated based on £19,500.

There will be an overpayment of approx £328 if you don't report the change until the year ends. If you call and update the estimate now then it would slightly reduce the overpayment.

The 2017/18 claim will be based on the full £22,000 subject to your expected 2017/18 income.

Tax credits are administered by HMRC rather than DWP. They don't give people into trouble but if you delay in reporting changes then it can lead to overpayments.

Zayats

Thank you for your response. If I report it now will my payments up to April reduce?

If an overpayment of £328.00 is incurred, will that be spread over the year?

My expected 17/18 income will be back to 19500 as I am not getting a salary raise this year, is there anyway they would be able to readjust the estimate based on this? Or will I have to wait to the following year for it to be readjusted?

Darksparkle

Yes they would need to reduce as you have already been overpaid.

They will take back a percentage of your future award to repay any overpayment.

The award for 2017/18 will remain based on £22,000 because of the £2,500 disregard.