Income falling by £70k - how do I claim tax credits?

Zara33

Dithering_Dad wrote: »

Are you getting support from your LEA for his schooling?

(assuming that he's of school age).

Finally yes :j it took a long time...just hope it continues.

Dithering_Dad

Zara33 wrote: »

Finally yes :j it took a long time...just hope it continues.

We're the same. Filled in a huge number of forms, supplied loads of supporting evidence from Doctors and specialists and jumped through hundreds of hoops and we finally got support for our daughter.

It left us exhausted and wondering whether the actual qualification for getting your kids support is simply to have the stamina to go through all that crap.

They were talking about taking it all away again the following school year, but then something appalling happened to our daugher at school and now we have the LA running scared. We now have support at least until High School.

p.s. Sorry I've taken this really off topic - even more than the 'Create a new thread' bullies did - it's just that whenever I come across anyone with a disabled child I simply have to ask about their support at school. I have yet to be told that anyone had an easy time of getting it.

tom9980

DD let me explain why i believe its best to create a new thread.

1. Its easier Benefits are complicated if you "add bits" to threads it gets confusing for all involved this is why its common practice in this board to create a new thread, our lives are complicated and full of different circumstances it really matters to get this information correct because of the complex rules.

2. I personally find it very hard to follow 3 or 4 different people needing help in one thread especially when circumstances are different example even having 1 extra child makes a HUGE difference here. In these threads i simply dont respond or help because im unable to follow and give good advice its common to see a thread brought up here and nobody responds because of this or they get asked to create a new one, this is the first time ive ever seen anyone complain about being asked to create a new thread.

3. Some threads like this one are long and frankly full of stuff ironically including this very post which really shouldnt be here at all, often people are spouting opinions rather than dealing with entitlement and the rules as they stand.

4. Some people read a thread from the start when someone posts something new months later asking about their own circumstance you quite often get someone commenting on something said months ago which is not relevant to the new person.

I hope this helps explain the issues at hand.

Dithering_Dad

michaels wrote: »

I'm PAYE but this thread has got me thinking. Could I pay a large proportion of my salary in to my pension for one year and live off reduced salary plus savings and therefore qualify for max tax credits for the year so that net amount of salary forgone is much less than amount added to my pension?

Hi michaels, thanks for directing me to this thread, though if I had known the sort of treatment I'd receive I think I'd have stayed in the Housing Board

To answer your question regarding pensions. You are allowed to put 100% of your PAYE salary into a pension plan each year and the Tax Credits are calculated on your salary minus any pension contributions. This is done deliberately to encourage low income families to contribute to pension plans.

Basically, if you earned £20k net you could put (for example) £15k into a pension plan and have the remaining £5k to live off for the year. Your £15k pension contribution would be increased by a 20% tax rebate to £18000 and your reduced income would (if you had 2 kids) net you an additional £9,033.75 in tax credits.

So to recap, if you did the above you would have £18k in your pension plan and an income of £14033.75 per year to live off. If you didn't do the above, you would have zero pension and £20k to live off.

Basically for a sacrifice of £5966.25 per year, you will be gaining £18,000 in a pension plan for when you retire. Provided you could afford the £6k dip in your annual income it'd certainly be worth doing.

It's not illegal, it's not immoral and it's not a 'loop hole'. The government designed the tax credits with the pension provision in it to encourage people to save for their retirement. If they did not want people to do this, they would either not subtract pension contributions from earnings or they would put a cap on how much pension contributions can be subtracted from income for TC purposes.

Good luck to anyone who uses Tax Credits to boost their pension contributions.

Lotus-eater

Dithering_Dad wrote: »

Come on, lets' be honest, it's not the ressurection of threads that is the problem here it's the fact that some people have a problem with the subject matter in this particular thread and wish to stop others from discussing it.

I was a bit dubious about this, till I read the first part of the thread, now I believe you are right.

I have done some work with the entitiled to website and it seems that savings may have a big part in what tax credits you are entitled to. Which sort of makes sense, as you have to sell your house to pay for care in your old age, why should this be any different.

Before you did anything DD, I would do your sums very carefully indeed. I am, I'm looking for personal reasons to do almost the same next year.

PasturesNew

Dithering_Dad wrote: »

...This is done deliberately to encourage low income families to contribute to pension plans.

Basically, if you earned £20k net you could put (for example) £15k into a pension plan and have the remaining £5k to live off for the year. Your £15k pension contribution would be increased by a 20% tax rebate to £18000 and your reduced income would (if you had 2 kids) net you an additional £9,033.75 in tax credits.

So to recap, if you did the above you would have £18k in your pension plan and an income of £14033.75 per year to live off. If you didn't do the above, you would have zero pension and £20k to live off.

Basically for a sacrifice of £5966.25 per year, you will be gaining £18,000 in a pension plan for when you retire. Provided you could afford the £6k dip in your annual income it'd certainly be worth doing.

Do you have the ability to hand to calculate the same for a single person?
Same figures. Just single.

parisjordana

wow do people actually get away with this......

Dithering_Dad

Lotus-eater wrote: »

Before you did anything DD, I would do your sums very carefully indeed. I am, I'm looking for personal reasons to do almost the same next year.

Hi L-e, the only thing I'll be doing will be trying to reduce my income from my limited company to below the 40% tax bracket. I will be doing this so that there is more money in my company to cover me during the recession. If I have an income of just under £40k, I will qualify for tax credits to the tune of £500pa. I guess it's worth claiming it - it'll cover the gas & electricity bill if nothing else.

PasturesNew wrote: »

Do you have the ability to hand to calculate the same for a single person?
Same figures. Just single.

I did the figures for a single person, but with 2 kids. If you're a single person and no kids but on a low income then you'll qualify for Working Tax Credit and possibly help with your Council Tax. Put your details into www.entitledto.co.uk to see what you're entitled to.

parisjordana wrote: »

wow do people actually get away with this......

There is no 'getting away with this', as I said in my explanation, the government designed tax credit this way. It's not a 'loop hole', they simply understand that if they encourage people to pay money into a personal pension, it'll save the tax payer money in the long run.

Anyone who receives tax credits and does not receive a pension from their employer should use the www.entitledto.co.uk website to do the calculations, they may find that they could contribute money into a pension without actually losing any income.

Dithering_Dad

I see the mods have been busy trimming this thread, yet didn't remove dmg24's and Tom9980's posts about me creating a new thread. They did remove my responses to these posts. I'm not sure why because they were perfectly valid. If they were going to remove my answers, then why not also remove the questions?

Anyway, to reiterate, I believe that there are two sorts of threads on MSE, specific ones and discussion ones. Specific threads are where a person asks a question based on his/her own circumstances, receives a lot of answers/advice and then the thread is discarded. Discussion threads are where a general subject is discussed, with each person adding to the discussion, often over a long time period.

I believe this is a discussion thread and so, even though some time had passed since the thread first started and was last discussed, I added my comments to the thread. Threads like this are invaluable on this sort of financial website as they provide a knowledge base of information on a certain topic, allowing someone who has questions to read up on the responses and not clog up the forum asking the same questions and getting the same answers.

The thread got a little heated after I contributed due to three of the benefit board regulars taking offense at me 'ressurecting' this thread. I believe that I explained my actions and that should have been it, but unfortunately the discussion was disrupted by these people.

Can I therefore just underline the following:

1) If you have no interest in a thread, then please just ignore its contents - there are hundreds of other threads created each day within the MSE forums. Surely you can find at least one that interests you.

2) Just because you are a regular contributor within a particular board, this does not give any more rights than someone who is a newbie. You therefore cannot repeatedly tell them what to do (such as create a new thread, when they have explained why they're adding to an existing one) or 'gang' up on them with your buddies to try to disrupt a thread whose contents you do not agree with (see point 1.)

Thanks for listening. Note to MODS - if you delet this responce, then please be 'even handed' enough to delete the posts I'm responding to.

Ta.

healy

My post has been removed too but apart from saying that I am not going to moan about it.