Tax credit overpayment - again

Parachute

For the second year running I've been told I have to repay working tax and child tax credits. Last year I received a total of 7 statements because of errors of some sort. I just gave up and accepted what I'd been given. This year my working tax element has been reduced to nil. They told me it was because I'd been overpaid so much the very first year of this scheme and that the figures I'd given them were wrong.

I can't see how my situation was so difficult. From 2003-4 I was part-time and earned about 10,000 p.a. My husband has incapacity benefit of about £3,700. We have two children, 11 and 13. Last year I was promoted to a full-time position and earned just under £14,000 pa., which information I relayed to Inland Revenue. When I telephoned them in May about being reduced to nil wtc, I was told that a combined income of 14,800 was about the maximum to be eligible for this benefit. Can this be so? I thought our family income was low as, but obviously many are worse off! Can anyone enlighten me, please!

CIS

On £14000, AFAIK they should have calculated on £11,500 (allowing for £2500 threshold).

Basic element 1570
Couple element 1545
30hr element 640

Family element 545
children element * 2 3250

Total elements £7550

Income £11500 - £5060 = £6440 * 0.37 = £2382

£7550 - £2382 = £5168 tax credits payable

The working tax credit component would not be reduced to zero by your income so that only child tax credit is payable, approx £1373 working tax credit should have been paid, but this may have been removed to pay back arrears.

Depending on your hsubands illness he may be entitled to claim the disability elements, further increasing the award, depending on rate of incapacity benfit paid, some of it is disregarded as income.

CIS

ooopps, just noticed that income was £14800, therefore total TC would have been £4871 based on £12300 p/a. (£3795 CTC and £1076 WTC)

irs101

Parachute

We need to know more about your 03/04 overpayment and how it occured before we can tell whether the figures are right. At your income level HMRC will reduce your award by 25% until the debt is cleared - but you must have had quite a massive overpayment for them still to be taking money.

Your family income is low for a couple with 2 children - although having said that, around 1.5 million families with children do receive WTC and at least 1 million of those will be on an income less than yours. To put it another way, you earn around 60% more than the national minimum wage, so there are many people in your situation.

Whether your income is low really depends on where you live and what the cost of living in your area is. However the government is only really concerned about people on your level of income if they have children (for a single person your income would be reasonably adequate) so this is why they have put all the extra money through CTC and only increased WTC (which is available to families with and without children) only by inflation.

irs