Why the age restrictions on tax credit?

starlite_2

i have just run our details through entitledto.co.uk and found that with our current income of around £11'000 we would be entitled to a fair amount of tax credits, however you have to over 25. we are 22, and 23. We are expecting our first baby in 18 weks, and i am assuming the same rule will apply to child tax credit. is this the case? and if so, why?

princessmoneysaver

We are a couple with 1 child almost 6, I'm 23 & hubby will be 24 later this month. We've had WTC & CTC for approx 3 years now (since it first started anyway) so your age shouldn't matter.

Yvonne

flea72

you only have to be over 25 if you are claiming as someone on a low income, who doesnt have children

starlite_2

Oh there is the confusion!, thanks for that, quite a relief. by the information I entered for 2004/2005 when we were both full time students and so only earnt around £3000 each over the year we should be entitled to c.t.c of £1898.64, and working t.c of £4611.56
Is it right that that will be the year they look at to work out our qualifications as i assume we cannot get them until the baby is born in november. and will they take into account our student loans as part of our income?

Lyndsay_21

another thing is i would when u fill out forms (i always ring up and do it) try and use this years calculation for your salary because if u earnt a lot less last year you'll get money based on last years figures so when it comes to next year your tax credits will go down a lot. hth

starlite_2

So if we got the higher rate from november based on 2004/2005, couldn't we just reapply in april based on our new previous years income?
Sorry i get confused by this..and reading the various posts on here I know what a minefield tax credits can be.

jenpoptab

Lyndsay_21 wrote:

another thing is i would when u fill out forms (i always ring up and do it) try and use this years calculation for your salary because if u earnt a lot less last year you'll get money based on last years figures so when it comes to next year your tax credits will go down a lot. hth

I agree, this is where a lot of people where stung recently and were told they were going to have to pay it back.

If your income is to be more than £2500 this year compared to previous year (the one they are looking at) then you definitely need to apply on this years income otherwise you could well end up owing them next year, and as you will have a newborn this is when you will need this money most.

starlite_2

Damn..wouldn't have thought so, but certainly best be safe than sorry. If we apply on this year (present tax year) how will they know our full income for this year and therefore our entitlement,
say if we apply in novemeber with bf earning £11'00 then he gets a pay rise, surely the entitlement is wrong, and so should be worked out at end of financial year?

chugalug

Just to say that student loans aren't taken into account for tax credits. Also if you need childcare (probably not yet!!) you can claim 85% through student funding as opposed to 70% through tax credits. HTH

irs101

Starlite

I'll spell out the process in full, so apologies if I say anything you already know.

You apply as soon as you are eligible - for you, November.

As you say, you can't know your full current year income until the year is ended. So HMRC take your income from the previous year and use that to work out your provisional entitlement and start paying you. The important word is 'provisional' i.e. you aren't definitely entitled to the money at this point.

After the end of the year you tell HMRC what you actually earned and they work out what you were entitled to. They'll then sort out the difference - if they owe you, you'll get a lump sum, if you owe them they'll reduce your future payments.

But....if you previous year income is significantly different from what you earn now, you can give them an estimate of your income for the current year. You can do this as often as you like, every time you get a pay rise etc. Just give them a call.

So, if you want to be cautious when you apply, give HMRC an estimate that is higher than your current income to take account of any pay rises. Hopefully they'll then end up owing you money.

irs