Increased but still low income

creamcakes

I have been receiving Child Tax Credits as well as Working Tax Credits. I'm a single parent and self employed.

My earnings were boringly predictable and around the 5K mark. A couple of years ago I had to prove this income and gave them all the details, invoices, correspondence etc, and they were fine with it. 5K was about the figure I made for 2016/17,

This year though, I have been more productive and was expecting an increase of a couple of thousand. I understand there is a £2500 disregard. But just last week I received a big payout of nearly £4000 from the ALCS who (very kindly) chase copyrighting payments for writers. tHis pushes me over 10K, and just within the current tax year.

I will phone them to tell them about the increase, but just wondered if they will drastically reduce my payments now, or expect repayment? I have read so much conflicting information on the internet. On the one hand my understanding is that the threshold for Child Tax Credits is about 16K, so I'm still below this. On the other hand, it does seem that people have payments reduced if their income changes by £2500 or more.

Eek, any help and clarity appreciated.

Darksparkle

The £16K threshold is for CTC only claims. As you say you also receive WTC so the threshold for tax credits reducing is £6420.

Tax credits is based on the previous year's income unless the current year income increases/decreases by £2500.

If you earned £5000 last year and earn £10,000 this year tax credits for this year will be calculated on £7,500.

So yes you'll likely have an overpayment for this year, I'd estimate around £400-450.

How your payments will be affected from April when the new tax year starts will depend on what you expect to earn for 2018/19.

creamcakes

OK. Thank you so much Darksparkle. I can understand there may be an overpayment, but it's worrying not knowing how much. Just a rough estimate is useful. I know they say the sooner you give them the information the better, but I think they are unlikely to give me a figure for how much I need to pay back, straightaway, on the phone. .