Please help me cancel tax credits

buckbeak1

My son is 17, in full time education ~ I am working 22 hours a week,9.50ph  My son is wanting to move in with his dad when he’s 18. I claim child and working tax, I’m single and will happily ring them in July (when he moves out) my question is, if I call and cancel in July will they make me pay back money between April and July? I’m so scared to cancel and owe thousands! I will pick up a bit of overtime but would I be better off switching from tax credits to universal credit then cancelling so I don’t have in-year finalisation? Between July and April I expect to do overtime but obviously I’m not earning a lot so won’t be able to afford to pay back thousands! When is the best time of the year to cancel tax credits? I understand I won’t be able to claim tax credits because I’ll be working under 30 hours. 

Please help me! I only earn £10,000 a year atm but feel so scared to work loads of overtime incase I mess up. 

Please help

buckbeak1

Can anyone help please? 

NedS

If you cancel/stop your claim mid year, they will do a pro-rata calculation to calculate your earnings for April to July and calculate your entitlement during that period. There may have been a slight underpayment or overpayment, but you are unlikely to know how much until you know exactly how much you have earned for that period, and exactly how many days / proportion of the year the period covers, but you will be entitled to tax credits on a pro-rata'd basis for the period, so will not be required to repay what you have received in full. Obviously, notifying them immediately of any change should hopefully avoid any large overpayment. Hope that helps.

buckbeak1

thank you thank you so much for the reply Neds.
so if I cancel in July ~ before the renewal deadline 31st July will i still have to wait until 2022 to see how much I owe them? Last years earnings were 10,000 but what if I earn an extra £2000 from July 2021-April 2022 . I read somewhere that as long as it wasn’t more than £2,500 then I won’t owe them much but if I earn more than 2,500 then I’ll owe them all the money from April-July 2020, it’s so complicated! I’m so worried. I just want to be able to work as much as I can but feel like I can’t otherwise I’ll owe too much money back! In theory, if he moves out in July and I don’t make no more than £50 a week (overtime) it should keep me from owing thousands... I’ll just have to struggle by from July to April and then I’m free to earn as much as I want! 

Why do they make it so complicated 😭 thank you so much for your help .

Spoonie_Turtle

buckbeak1 said:

thank you thank you so much for the reply Neds.
so if I cancel in July ~ before the renewal deadline 31st July will i still have to wait until 2022 to see how much I owe them? Last years earnings were 10,000 but what if I earn an extra £2000 from July 2021-April 2022 . I read somewhere that as long as it wasn’t more than £2,500 then I won’t owe them much but if I earn more than 2,500 then I’ll owe them all the money from April-July 2020, it’s so complicated! I’m so worried. I just want to be able to work as much as I can but feel like I can’t otherwise I’ll owe too much money back! In theory, if he moves out in July and I don’t make no more than £50 a week (overtime) it should keep me from owing thousands... I’ll just have to struggle by from July to April and then I’m free to earn as much as I want! 

Why do they make it so complicated 😭 thank you so much for your help .

If you're really having to earn that little, Universal Credit sounds like it might be better!  Earnings are taken into account each month based on what you actually receive, and while your son is with you you'll have an extra amount plus a work allowance of how much of your earnings they disregard before even starting to make deductions.

I'd advise putting your details into a benefits calculator, based on now and another calculation based on when your son moves out.  Do be aware the standard rate of UC drops by ~£90 per month in September though, and with your son gone you would lose both the child element and the work allowance (unless you have a health condition that affects your ability to work, but you've not implied that at all).

If you were to claim UC that would automatically close your TC claim for you, but there is no going back (well, there isn't with closing the claim yourself either) so make sure you are certain before doing anything.

calcotti

buckbeak1 said: I read somewhere that as long as it wasn’t more than £2,500 then I won’t owe them much but if I earn more than 2,500 then I’ll owe them all the money from April-July 2020.

You have misunderstood what you read. Your current Tax Credits payments are normally based on your income from last year. Your actual entitlement is not confirmed until after the end of the tax year. If you income has changed by less than £2500 over the year then the final award is still based on the original year used. If it has changed by more than £2,500 then the final award is based on the current year incorporating the change. This does not mean you have to pay everything you have received back it just means that the calculation has to be redone - which may mean that you have to pay some back but it's impossible to know without knowing the numbers involved.

buckbeak1 said:.. if he moves out in July and I don’t make no more than £50 a week (overtime) it should keep me from owing thousands... 

You must report the change promptly. As you say, if you are working less than 30 hours, you will have no ongoing Tax Credits entitlement (however the claim remains open).
If the calculator suggests that you will be entitled to UC after your son has moved out then you should claim UC. The act of applying for UC will end the Tax Credits claim and trigger an in year finalisation. 

sheramber

If you are worried about th payments from April to July not being due then put them away in a separate bank account and the money will be there  if you need to repay it.

buckbeak1

Thank you for all the replies! 

I would put the tax credits in a separate bank account but I actually need them atm. Whereas once I’ve cancelled them, I’ll be allowed to work more hours (overtime) but things are tight as it is, so don’t have that option ~  I’m feeding my son and myself and paying rent and bills! 

It’s just not an option as I need the tax credits atm. 

So am I correct in thinking once I cancel the tax credits, it doesn’t matter how much I earn between April 2021/April 2022 ? Because it’s all based on the year before? 

It says on the website that if I don’t renew by July 31st then I will owe all the money back from April to July so I’m not quite sure what to do! 

I’m just so confused, so I’m tied to tax credits until April 2022? Even if I don’t receive money off them! But won’t know how much I owe until they sort it in April 2022? 

So this p60 will be roughly £10,100 (-how much I made last year 2020/21) will the tax credits I received from April to July be worked out against £10,100? 

I’m sorry if I sound confused~ I am 😅
I thought it would be simple to cancel it but it looks as though it’s going to be harder than I first thought! Obviously I’ll tell them as soon as my circumstances change without a doubt but I always had in my head I’ll just work lots of overtime to try and make up for some of the tax credits.... but from what I had read-If I earnt loads more than last year they’ll make me pay back ALL the tax credit money 🤯  
Maybe I’ll speak to someone at citizens advice! I’m worrying myself sick 😢🥺 

buckbeak1

I’m wondering if it’s a good idea ending tax credits and moving to universal credit while my son is still living with me? Maybe that would stop me owing loads back? 🧐

calcotti

buckbeak1 said: So am I correct in thinking once I cancel the tax credits, it doesn’t matter how much I earn between April 2021/April 2022 ? Because it’s all based on the year before? 

As already advised it is based on the previous year if the annual difference is not more than £2500. It will only be finalised at the end of the 2021/22 tax year - unless you claim UC in which case therewill bean in year finalisation.

buckbeak1 said: It says on the website that if I don’t renew by July 31st then I will owe all the money back from April to July so I’m not quite sure what to do! 

That means if you do not return your renewal back, if required to do so, byJuly 31st. 

buckbeak1 said: So this p60 will be roughly £10,100 (-how much I made last year 2020/21) will the tax credits I received from April to July be worked out against £10,100? 

Yes, based on an annual salary of £10,100.

buckbeak1 said:..but from what I had read-If I earnt loads more than last year they’ll make me pay back ALL the tax credit money 🤯  

As already advised there will only be a possible repayment due if the annual difference is more than £2,500 and even then, this just means a new calculation has to be done. Whether or not any money is due will depend on the numbers involved.