Increase in income and Child Tax Credits

merlinthehappypig

Can anyone give me a rough idea of how an increase in income will affect our child tax credits?

I've had a good look on the web, but all I can find is conflicting figures, even on the Inland Revenue site.

I am married with two qualifying children aged 12 and 13. I don't work due to disabilty, neither does my wife.

This year (2007/2008) our tax credits were based on a qualifying income of £13500 from 2006/2007, but, having sold the house, we have an investment income of about £5000 to add to this for the 2007/2008 tax year, bringing our total income for 2007/2008 to about £18500.

Can anyone give me an outline of how this additional income will affect our tax credits for the current year (2007/2008) and next year (2008/2009)?

Do I need to declare this additional income now, or can it wait until the annual review in a few months time?

Conor_3

It needs to be declared now really. It'll end up being applied retrospectively when you confirm your income for this year anyway. Either way, the payments are going to be ended up getting cut - the only thing is the timing of it.

merlinthehappypig

Thanks.

I realise that the payments will reduce, just can't see by how much. I read something that said that the first £2500 of any increase in income is ignored and something else that implied that I can increase the income to £16400 before the amount payable starts to reduce.

If that's the case it isn't going to have much impact, but I need to decide how to play our investments for the coming financial year until we buy a house!

[Deleted User]

Based on the info above you would have been receiving around £81 p/w CTC - from April 6th you would be entitled to around £68.75 p/w.

You can earn up to £25,000 more in the current year (07/08) than you did in the previous year (06/07) without it causing an overpayment. But the increase in income will reduce your award for the following year (08/09).

The £16400 figure you have found is regarding WTC, you can earn up to around this figure before your CTC is affected - but this is only if you are working and receive WTC, so this figure doesn't aplly in your case.

You should call up on Tuesday or Wednesday (as systems are currently down for maintenance) to let them know your 2007/08 estimate (it cannot be recorded as an actual figure until you have been issued your renewal pack, even if the figures are exact).

merlinthehappypig

subsoniccoyote wrote: »

Based on the info above you would have been receiving around £81 p/w CTC - from April 6th you would be entitled to around £68.75 p/w.

You can earn up to £25,000 more in the current year (07/08) than you did in the previous year (06/07) without it causing an overpayment. But the increase in income will reduce your award for the following year (08/09).

The £16400 figure you have found is regarding WTC, you can earn up to around this figure before your CTC is affected - but this is only if you are working and receive WTC, so this figure doesn't aplly in your case.

You should call up on Tuesday or Wednesday (as systems are currently down for maintenance) to let them know your 2007/08 estimate (it cannot be recorded as an actual figure until you have been issued your renewal pack, even if the figures are exact).

Thanks.

You're a star! Shame I can only thank you once........

Did you mean £2500, rather than £25000? £25000 seems a lot.

We are likely to have the extra £5000 or so for the 2008/09 tax year as well so presumably, all else being equal, we will be on the £60 or so a week for 2009/10 as well?

It's quite complex and we wanted to make sure that the investment income caused as few problems as possible, especially as it will only be temporary.

[Deleted User]

No it was actually increased to £25k, it was previously £2500

merlinthehappypig

Thanks for clarifying that. An increase of £25000 would be a problem I could live with!

skoda38

hi, any any interest earned from tax free savings (isas,index linked certificates,premium bonds ,etc) is not counted as income for tax credit purposes. anything else and you can still disregarde the first £300. hope this might be of interest (haha)