Child Tax Credit and backdated pension

the_disgruntled_one

After a long battle, I was awarded my occupational pension early on grounds of ill health in July 2020. It was backdated to April 2016. The backdated income has been reported to Tax Credits as income for 2020/21. It’s a modest pension below £2500, but the backdated amount has caused havoc with my Child Tax Credit award. I was taxed on the amount by my pension provider, but HMRC Income Tax are going to allocate the back pay to the correct year back to 2016 and should lead to a refund of all of the tax paid.

I spoke with Tax Credits today (literally took me from 11am to 6.30pm to get through!) and they are adamant that they don’t do things the same way as the tax office does, so I’m going to be hammered by them it seems. I’ve tried to find a similar question but haven’t been able to. Does anyone know what the rules are? Seems stupid to me that two departments of HMRC treat the same income so differently.

Dazed_and_C0nfused

Have a read here but there is no obvious reason to think that the income can be spread for Tax Credit purposes.

The rules for income tax and Tax Credits don't always match, rental income being one with a notable difference in what is income.

calcotti

Dazed_and_C0nfused said:

Have a read here ..

Did you mean to include a link?

Dazed_and_C0nfused

Oops,

https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm04000