SOA and Tax credit overpayment

Jami74

I've just received our tax credit renewal stating we need to repay nearly £900 immediately. We are no longer eligible so it can't come off future repayments. I did update our income back in the autumn and they reduce payments but by not enough. They stopped completely in April and now they want their money back.

I'm going to ask if we can pay back in monthly installments. Please help me find this money. We have been so skint for so long and I thought we were finally making progress so this is a bit of a blow.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1775 (It fluctuates, but this is average over the last 12 months)
Partners monthly income after tax....... 550
Benefits................................ 137.4 (Child benefit)
Other income............................ 0
Total monthly income.................... 2462.4

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 950 (Cheapest by far for what we have in the area. Small 3 bed terrace.)
Management charge (leasehold property).. 0
Council tax............................. 141
Electricity............................. 100 (Pre-payment meter. Have recently switched to cheapest tariff.)
Gas..................................... 0
Oil..................................... 0
Water rates............................. 35 (In credit with SW. Expecting it to drop to about £20 in August)
Telephone (land line)................... 0 (Packaged with BB)
Mobile phone............................ 22.5 (3 contracts)
TV Licence.............................. 12.83
Satellite/Cable TV...................... 8.99 (Netflix)
Internet Services....................... 25 (Could change but have 2 teens so need 38mb)
Groceries etc. ......................... 500 (Have reduced by about £200 per year every year for last 3 years. Online supermarket shopping because I'm too busy/tired to browse.)
Clothing................................ 15 (Actually have no idea. Teens get clothes for Xmas/Birthday so only essentials purchased and not very often)
Petrol/diesel........................... 100 (Have recently reduced commute so hopefully this will drop)
Road tax................................ 13.33
Car Insurance........................... 15
Car maintenance (including MOT)......... 16.66
Car parking............................. 75 (Could walk 40 minutes each way to work)
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 60 (Not really sure. 1 teen has 2 extra-curricula groups, the other has college expenses)
Medical (prescriptions, dentist etc).... 5 (hayfever/cold & flu remedies etc)
Pet insurance/vet bills................. 40 (1 dog, 1 cat)
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 0 (DIY)
Entertainment........................... 0
Holiday................................. 75 (Have booked holiday for 2021 before tax credit demand. Will be our first in a while)
Emergency fund.......................... 0
Total monthly expenses.................. 2260.31


Assets
Cash.................................... 3000 (This is the presents/holiday/car savings/help to save money)
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 3500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Loan (paid overdraft)..........3600......153.5.....6.7
MBNA CC........................1250......25........0 (Paying £50/month. Will owe £600 when 0% ends at same time help-to-save pays out £600)
Total unsecured debts..........4850......178.5.....-


Monthly Budget Summary
Total monthly income.................... 2,462.4
Expenses (including HP & secured debts). 2,260.31
Available for debt repayments........... 202.09
Monthly UNsecured debt repayments....... 178.5
Amount left after debt repayments....... 23.59

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,850
Net Assets.............................. -1,350

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

I've tried to be as accurate as possible. I've recently had a student loan refund and 2 bank switches which has kept us ticking over.

Thank-you for looking.

ohdearhowdidthathappen

Tax credits are so rubbish when they do this, hopefully they agree to monthly repayments...
There are 3 obvious things that stick out on your SOA to me

1) Can your partner increase their income? If both your children are teenagers, childcare shouldn't be an issue
2) You could reduce your grocery bill to £350-400 per month quite easily for 4 people
3) can you cancel your holiday for the moment? Use that £75 towards debt repayment and then book something else nearer the time

EssexHebridean

Good plan to see if they will take monthly instalments - they can't have what you haven;t got after all so hopefully they will!
Comments on SOA in red...

Jami74 wrote: »

I've just received our tax credit renewal stating we need to repay nearly £900 immediately. We are no longer eligible so it can't come off future repayments. I did update our income back in the autumn and they reduce payments but by not enough. They stopped completely in April and now they want their money back.

I'm going to ask if we can pay back in monthly installments. Please help me find this money. We have been so skint for so long and I thought we were finally making progress so this is a bit of a blow.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1775 (It fluctuates, but this is average over the last 12 months) This isn't a helpful way of working things out as it throws your budget off on the lower months and the higher months stand a risk of being frittered - instead base everything on the lowest months with a plan in place to stash money into the emergency fund or throw at debts in the higher income months.
Partners monthly income after tax....... 550
Benefits................................ 137.4 (Child benefit)
Other income............................ 0
Total monthly income.................... 2462.4

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 950 (Cheapest by far for what we have in the area. Small 3 bed terrace.) Might be worth browsing around to see if you can get something which is better value a short distance away if you are in a particularly pricey area.
Management charge (leasehold property).. 0
Council tax............................. 141 Is this over 10 months or 12 as it seems quite high? If 10, get it split across 12 instead.
Electricity............................. 100 (Pre-payment meter. Have recently switched to cheapest tariff.) All heating on electricity I assume so storage heaters? Make absolutely sure that you are on an economy 7 meter as storage heaters need this - also really learn about using them as that can save you a fortune! beyond that just make sure things are turned off when not in use, limit times for showers and that sort of thing to reduce usage.
Gas..................................... 0
Oil..................................... 0
Water rates............................. 35 (In credit with SW. Expecting it to drop to about £20 in August) If yo are in credit instigate the drop now. I take it this is metered so you can also work to reduce use? (Although in fairness for SW Water that's a decent monthly amount!
Telephone (land line)................... 0 (Packaged with BB)
Mobile phone............................ 22.5 (3 contracts)
TV Licence.............................. 12.83
Satellite/Cable TV...................... 8.99 (Netflix)
Internet Services....................... 25 (Could change but have 2 teens so need 38mb) Ummmm, no, you/they WANT that speed. Nothing is needed in that line unless someone is running a business from home and has requirements due to that.
Groceries etc. ......................... 500 (Have reduced by about £200 per year every year for last 3 years. Online supermarket shopping because I'm too busy/tired to browse.) Aim to reduce by another £200 this year and you'll be starting to approach a reasonable spend. If you buy brands, stop and downshift. if you buy supermarket premium, stop, downshift. Try the wonky/basics/value fruit and veg. From the income your partner presumably works short part time hours - can they not take responsibility for the shopping if your hours are long?
Clothing................................ 15 (Actually have no idea. Teens get clothes for Xmas/Birthday so only essentials purchased and not very often) You need a handle on this - guesswork in an SOA doewsn't help you - work out what the spends have been (remember to include school uniform etc) and then set a budget accordingly - remember to set aside the excess that doesn't get spent in any month.
Petrol/diesel........................... 100 (Have recently reduced commute so hopefully this will drop)
Road tax................................ 13.33 If you're paying this monthly you need to budget to pay upfront next time - there is a premium on paying monthly
Car Insurance........................... 15 Great value - well done!
Car maintenance (including MOT)......... 16.66 Is this actually realistic? You clearly do a fair mileage - this might just cover an MoT Test and an annual service, but remember tyres, wiper blades etc as well.
Car parking............................. 75 (Could walk 40 minutes each way to work) You could, couldn't you...that would cut your fuel cost AND the depreciation on the car too
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 60 (Not really sure. 1 teen has 2 extra-curricula groups, the other has college expenses) Again - "not sure" isn't helping you - you need to know what these figures are.
Medical (prescriptions, dentist etc).... 5 (hayfever/cold & flu remedies etc)
Pet insurance/vet bills................. 40 (1 dog, 1 cat)
Buildings insurance..................... 0
Contents insurance...................... 0 You need this - get it sorted ASAP as it's a must have.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 Pretty high allowing you also have debt to shift
Haircuts................................ 0 (DIY) All of you? Even any females?
Entertainment........................... 0
Holiday................................. 75 (Have booked holiday for 2021 before tax credit demand. Will be our first in a while)
Emergency fund.......................... 0 You need to start saving this
Total monthly expenses.................. 2260.31


Assets
Cash.................................... 3000 (This is the presents/holiday/car savings/help to save money) That's a coincidentally round amount - is this accurate? I'd also suggest separating out at least the holiday money on this one to make sure you are definitely on track for having the right amount saved when payment needs making.
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 3500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Loan (paid overdraft)..........3600......153.5.....6.7 Loan? Or overdraft? There's a big difference as an OD can be withdrawn by the bank at any time, and with no notice
MBNA CC........................1250......25........0 (Paying £50/month. Will owe £600 when 0% ends at same time help-to-save pays out £600)
Total unsecured debts..........4850......178.5.....-


Monthly Budget Summary
Total monthly income.................... 2,462.4
Expenses (including HP & secured debts). 2,260.31
Available for debt repayments........... 202.09
Monthly UNsecured debt repayments....... 178.5
Amount left after debt repayments....... 23.59 This is squeakily tight but there's savings to be made in the SOA which will help.

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,850
Net Assets.............................. -1,350

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

I've tried to be as accurate as possible. I've recently had a student loan refund and 2 bank switches which has kept us ticking over.

Thank-you for looking.

You HAVE to tackle the situation now if you're relying on stuff like the bits in bold above to keep things on track currently - those things are closed-ended and you can't rely on them, so getting your budget sorted and the debt gone is the way forwards.

First step is to get proper figures from the things you don't know about - second is to make sure that you're not actually spending more in any area than you've put in the SOA as, I'll be honest, I think you've estimated a fair bit in there. Third step is to make savings where you can in order to free up enough money to cover the Tax Credit repayments. fourth will be to tackle the debt but that may have to wait until TC's are sorted.

The good thing is that there are definitely savings you can make - food being a blatantly obvious quick win.

Jami74

ohshithowdidthathappen wrote: »

1) Can your partner increase their income? If both your children are teenagers, childcare shouldn't be an issue

Yes. They will absolutely need to contribute an extra £100/month at least going forward.

2) You could reduce your grocery bill to £350-400 per month quite easily for 4 people.

Yes. This needs to be done. I was meal planning for a while which worked out well but then my hours at work increased. Will be going back to this. My teens both seem to be going through a growth spurt and are so hungry at the moment so need to plan better to stop the snacking.

3) can you cancel your holiday for the moment? Use that £75 towards debt repayment and then book something else nearer the time

No. But I appreciate the suggestion. I will work an extra day a month to put that money away into an interest bearing account.

EssexHebridean wrote: »

Good plan to see if they will take monthly instalments - they can't have what you haven;t got after all so hopefully they will!
Comments on SOA in red...

You HAVE to tackle the situation now if you're relying on stuff like the bits in bold above to keep things on track currently - those things are closed-ended and you can't rely on them, so getting your budget sorted and the debt gone is the way forwards.

First step is to get proper figures from the things you don't know about - second is to make sure that you're not actually spending more in any area than you've put in the SOA as, I'll be honest, I think you've estimated a fair bit in there. Third step is to make savings where you can in order to free up enough money to cover the Tax Credit repayments. fourth will be to tackle the debt but that may have to wait until TC's are sorted.

The good thing is that there are definitely savings you can make - food being a blatantly obvious quick win.

Thank-you so much for your input.

I've been keeping a spreadsheet for the last three years and practicing money saving for at least the same amount of time. Not always as frugal as we should be. My lowest recent wage was last December where I took home £900 due to a payroll muck up which was managed with a 0% purchase card and balanced out by the end of March. Living on the lowest monthly income would not be possible but thankfully there is an interest free buffer.

Rent: We're in the cheapest area for miles around and very convenient for our jobs. For £100 less we could get a 2 bedroom flat but the cost of deposit and moving means it would be months before we saw a financial benefit.

Council tax: Yes, over 12 months. Otherwise it would have been more. We're in the South East. I don't think moving North is a possibility at the moment because teens are halfway through exam courses. Should have done it ten years ago.

Shopping wise: No posh brands left although although potential to reduce snacking/drinks costs I reckon.

Electric: Yep, economy 7 and only one storage heater used during the winter, although we use the oven more for cooking when it's cold. Has been off for months now so currently topping up less. When you say 'use it correctly' what do you mean? We turn it on in the evening and off again in the morning. It's ancient so no fancy knobs to fiddle with.

Water: Am really pleased with our saving here. We've been recycling bath water for our toilet and our monthly meter readings suggest we're less than £30/month. When I phoned them to drop it (from £47/month) they actually wanted to increase our dd because we're paying less than average. I'm hoping they'll drop it when they do their own meter reading.

Clothing: A lot of it comes under our supermarket spend (yes, we wear supermarket clothes ). I've never separated the receipts out. I suppose I should have another tab to itemise the supermarket shop. Might be useful to see what goes on proper food, rubbish food, toiletries and clothes etc.

Internet: Yes, it's a want. But it's excellent internet and an extremely useful want.

Supermarkets: I think this is our area for our biggest saving. Could potentially reduce our bill by £100 with better planning.

Clothes: So rarely buy anything for myself and choose cheapest possible option. Teens have outgrown me so some hand-me-downs.

Road tax: Was £160 for the year. Recently paid in full.
Car maintenance: Yes you're right. I forgot about the tyres and plugs because that was last financial year. I have set up a 5% regular saver of £100/month to cover next years Insurance/Tax/MOT and my professional fees. After professional fees £900 to cover the car costs. This year the Insurance/Tax/MOT cost £560 so there's a bit of a buffer for extra costs. Do you think that's reasonable? Also expecting to reduce mileage.

Car parking: Yes I need to walk. That will be a huge saving. I will start tomorrow.

Contents insurance: We've never had it. Is it really so important? All our furniture is so old and was cheap or second hand to start with.

Presents: Started putting it away in January given last Decembers disastrous payroll error thinking that I'd have £600 by end of November to cover Christmas with some left over for birthdays. I've actually already reached the £600 milestone so could theoretically stop saving this now.

Haircuts: Yes 'fraid so. Females have long hair so it just gets trimmed when needed by a family member. Maybe shorter hair would save on shampoo.

Emergency fund: I think that's what the extra savings are. It's only very recently that I've more coming in than going out so putting money away is new.

Cash: Currently £600 Xmas account (1.5%). £300 Car account (5% regular saver). £100 holiday (1.5%). £600 Gov help-to-save (+ £300 bonus not counted as not mine yet). £1400 TSB (3% - maybe this is my emergency fund?).

Loan: Sadly we crept into (an arranged) overdraft over a period of time due to me not working enough while studying and some very costly car expenses. I've looked and looked at how to pay it off quicker but I don't think the savings in interest over the time scale would be worth not having the money put away to cover next Xmas, car costs etc.

Would it be better to pay tax credits in one go with the TSB money so then it's gone? I know I'm not in serious debt like many people on this forum but I'm aware that I'm on a slippery slope.

Thank-you X

MallyGirl

Jami74 wrote: »

Contents insurance: We've never had it. Is it really so important? All our furniture is so old and was cheap or second hand to start with.

If you had a fire and escaped in the clothes you were wearing how would you come up with enough to buy even basics like underwear. Essential and not very expensive.

EssexHebridean

Jami74 wrote: »

Electric: Yep, economy 7 and only one storage heater used during the winter, although we use the oven more for cooking when it's cold. Has been off for months now so currently topping up less. When you say 'use it correctly' what do you mean? We turn it on in the evening and off again in the morning. It's ancient so no fancy knobs to fiddle with.

First off - find out what models you have and google for instructions. we've only just got rid of 1 properly ancient one and still have one that's fairly elderly, although still working.

There should be at least a dial for input and output - and the trick is to establish what the weather is likely to be the next day and tweak accordingly - you don't need to be Michael Fish but a rough idea of temperature helps a lot. Assume you have an immersion heater for water to? Make sure as long as the thermostat works OK you leave that on and timed to run overnight - ours is on the right circuit to ONLY heat overnight unless we over-ride it. Also check your timing settings for the water - ours was playing up a few weeks back and it was several days before we thought to check only to discover we must have had an overnight power-outage which knocked the timer back by several hours so it wasn't heating...

Back to the heaters - when you get home, switch one of them on and go and look at your meter - watch it for 30 seconds or so and you should barely see the red light flash (hopefully you have one with the light indicator) as the heater shouldn't be charging at all during the daytime - I'm wondering whether you have one on the wrong circuit as that electricity bill is honestly barmy. If they are wired correctly you should literally be able to flick the switch on the wall at the start of winter, and flick it off again in the spring - and in between all adjustments are on the heater itself.

As a guideline - and yes we cook using gas but that shouldn 't make *that* much difference - our electricity is under £40 a month and we have plenty more than a single storage heater working all winter! (And until recently also had one of the very old ones in regular use)

Yellow_mango

Car parking: Yes I need to walk. That will be a huge saving. I will start tomorrow.

Do you have a bike? Over that sort of distance cycling should be very achievable, and cut your journey time in half at least!

Jami74

EssexHebridean wrote: »

First off - find out what models you have and google for instructions. Ha I found it! Was a model made between 1987 - 1991 and is now obsolete. :rotfl:

There should be at least a dial for input and output - and the trick is to establish what the weather is likely to be the next day and tweak accordingly It does have those dials! We have fiddled with them but it never seemed to make much difference. However, I have just found a guide on how to use them, so will be trying that come winter. Thank-you for suggesting this.

Back to the heaters - when you get home, switch one of them on and go and look at your meter - watch it for 30 seconds or so and you should barely see the red light flash We have a pre-payment meter. I don't think it flashes. It's outside so I don't spend much time watching it, maybe it does sometimes. When should it flash?

I'm wondering whether you have one on the wrong circuit as that electricity bill is honestly barmy. Is it? I have no idea what other people pay for their electric. I've changed tariff recently and seem to be topping up a lot less. Last years top-ups (12 months) came to £1205, it's been roughly that for years. It's always tricky in winter and I always plan to leave the heater off as long as possible but it's difficult being cold.


Also check your timing settings for the water Ah, now this is a thing I need to do. I've never managed to find a dial or anything on our water tank, it's half behind some panels in the bathroom but sounds like it will be worth taking them down to look. Thank-you.

Yellow_mango wrote: »

Do you have a bike? Over that sort of distance cycling should be very achievable, and cut your journey time in half at least!

Erm, well....I thought about it. It gets very windy here, and I'm not very fit....

However, I did walk to work on Friday and it was fab! I had forgotten how much I love walking, so pleased I've saved a tenner on parking already.

Thank-you both very much for your suggestions.

EssexHebridean

Yes, the old one we just had removed was slightly older than that, and the one we've retained is about that age!

We have a pre-payment meter. I don't think it flashes. It's outside so I don't spend much time watching it, maybe it does sometimes. When should it flash?

On ours the red light flashes to show use - so on "tickover" with not much using power it flashes only occasionally, but at night when the heating or water heater is on it'll be flashing almost constantly. Have a little look at THIS LINK to hopefully find out a bit more about your meter. Also once you have checked the meter to make sure that is twin-rate check your paperwork from the supplier to make sure that you definitely ARE on an economy 7 deal.

Water heater timer - ours is in the larder with the fuseboard rather than near the water heater itself - it sits just near to the small cream coloured box that has the Economy 7 fuses (I think!) in it. it looks a bit like a standard timeswitch dial so should indicate roughly the current time when you look at it to be correct. Another thing to look at here might be the switch for the immersion itself - that should have a red light on it to show whether it has power being fed to it or not. How do you currently manage heating your water and do you have / use the ability to set it running to reheat during the day if you run out of hot water before it next kicks in on timer?


On that contents insurance thing by the way - have you got it sorted? MallyGirl is spot on about this - if you are in doubt think of the sort of level of loss the Grenfell Tower residents suffered and then thing how you'd replace everything. Contents insurance it nothing to do with "expensive stuff" but instead has everything to do with the replacement costs for those basics that are essential to life - those would be higher than you would think and currently you certainly don't have the funds spare to even get started.

Jami74

EssexHebridean wrote: »

Also once you have checked the meter to make sure that is twin-rate check your paperwork from the supplier to make sure that you definitely ARE on an economy 7 deal.

Definitely economy 7 and the two rates on the meter match the rates on my paperwork, which is currently the cheapest I can get with EDF.

Odd thing about economy 7 though, it's not seven consecutive hours. At least this meas that I'm on night rate until 7.30am though which means I can get washing done on night rate.

EssexHebridean wrote: »

It looks a bit like a standard timeswitch dial so should indicate roughly the current time when you look at it to be correct. Another thing to look at here might be the switch for the immersion itself - that should have a red light on it to show whether it has power being fed to it or not. How do you currently manage heating your water and do you have / use the ability to set it running to reheat during the day if you run out of hot water before it next kicks in on timer?

I found the timeswitch with two metal pins and have got it set up to come on between 5.30 and 7.30 am. I've never noticed the dial move before but this time I found a hidden switch on the other side of it (it's in the back of a dark cupboard so not easy to access) and it seems to be working well.

The boiler is very big and seems well insulated, plus our upstairs is always warmer than downstairs (wooden house, poor insulation). If necessary in the winter I can set it to come on again in the afternoon for an hour (will have to 'make' some more pins)

The main switch does have a red light, but the bulb must have gone because it never shines when it's on.

EssexHebridean wrote: »

On that contents insurance thing by the way - have you got it sorted? MallyGirl is spot on about this -

You are right. It's my next job.

Thank-you so much for your advice. Sometimes I really need step-by-step instructions.

Jami74

EssexHebridean wrote: »

Have a little look at THIS LINK to hopefully find out a bit more about your meter.

The time is wrong on the meter! :O It thinks it is 2 hours and 50 minutes later than it is.

I wonder if this means that our night rate does not kick in until 1.20 am. The EDF energy statement says night rate is 22.30 - 00.30 and 02.30 - 07.30.

Our storage heater starts getting warm about 22.00 when it is on in the winter.

Our night rate usage is about 55% of our total usage.