help with tax credits PLEASE

levercleverc

Hi hope someone could offer some advice .We are a working couple with 1 10 year old .

1 earns 20k for 40 hrs per week
1 earns 7.5k for 25 hrs per week .

The bracket for claims is between £22826 and 75k
we have been awarded £10.52 a week in credits

if the wife stopped working would we really be that worse off?

just wondered what award we may get .I have completed the calculator online but i guess it is "set" to not encourage people to quit work

your advice would be greatly appreciated

dmg24

The entitledto calculator is 'set' to give an accurate indicator of entitlement.

Do you think there is a little man sat behind it saying 'Ooh, don't want this lady to give up work. Best change that number!'?

Conor_3

Basically over a certain amount, WTC is reduced by 75p for every £1 over this limit.

mitchaa

Where have you got your figures from?

The CTC family element only bracket is set at around £22,500-£59,000. It starts to taper off from the full family element (£545pa) at around £50k upto £59k where the award is £0 (The thresholds are set higher if you have a child under 1 and then revert to the above limits when child is 1)

A couple with 1 child and no childcare costs earning between these amounts will only ever receive £545pa (£10.48pw)

If you earn more than the £59k you will get no award, if you earn less than the £22500 (approx) you will get slightly more.

To give you an indication of how much you would get, the max entitlement for 1 healthy child even if both parents do not work is £2085pa, so your max award would be the £545 family element + 1x£2085 child element. Total award of £2630pa (£50.57pw)

This is the maximum possible award with 1 healthy child

To qualify for this max entitlement you must have an income below around £16,000. Again there is a taper in place between £16k and £22500 where the full entitlement of £2630 dwindles away down to £545 when you reach the £22500 mark.

At a total guess, i would assume your salary is the £20k and your wifes is £7500 so your income would be assessed on £20k.

You are above the threshold for WTC (Which is set at around £16k) and your CTC award wouldn't be much higher than £545, probably around £700pa due to the taper.

Best way to do it for more accurate figures is to use the calculators.

No point in giving up £7500 to 'earn' an extra £100-150pa through CTC though:rotfl: It will certainly not work in your favour:rolleyes:

(figures may slightly vary, but not by much)

sheilavw

It said on my renewal pack if our earnings between £22826,00 and £75000.00 neednt do anything to still get the £10 odd a week, we are one child aged 15 (other one 20) so it must have changed a little

mitchaa

Thanks, they must have just recently moved the thresholds then.

It was set at around £59000 as of March 2008.

I shall have to do a bit of research into that 1 as the £75000 upper limit will make me eligible for an entitlement:)

Cheers

[Deleted User]

The threshold of £75,000 is including the income disregard of £25,000.

Basically if your income in the previous year is between £22,826 and £50,000 you can earn up to £75,000 this year without it making a difference to your current year award.

If you are going to earns over £50,000 for the year you should provide this estimate near the end of the financial year so that next year's payments can be adjusted straight away.

mitchaa

subsoniccoyote wrote: »

The threshold of £75,000 is including the income disregard of £25,000.

Basically if your income in the previous year is between £22,826 and £50,000 you can earn up to £75,000 this year without it making a difference to your current year award.

If you are going to earns over £50,000 for the year you should provide this estimate near the end of the financial year so that next year's payments can be adjusted straight away.

Got you, so its not really £75k then.

I just entered £60k into the calculator and entitlement was £0 so i guess the £59k limit has not changed. The £25k income disregard is misleading then as you cannot earn £75000 YOY.

Still doesn't change anything in regards to O.P question though, he would gain very very little at the bottom end.

edit....

Its actually a £58k CTC limit...

http://www.hmrc.gov.uk/pdfs/wtc1.htm

Oh well

Elle00

levercleverc wrote: »

Hi hope someone could offer some advice .We are a working couple with 1 10 year old .

1 earns 20k for 40 hrs per week
1 earns 7.5k for 25 hrs per week .

The bracket for claims is between £22826 and 75k
we have been awarded £10.52 a week in credits

if the wife stopped working would we really be that worse off?

just wondered what award we may get .I have completed the calculator online but i guess it is "set" to not encourage people to quit work

your advice would be greatly appreciated

If you're saying your wife works the 25hrs per week (you've not made that clear) then I think you'd be quite a bit worse off financially yes. I don't see a problem if one half of a couple is earning a liveable wage and one wants to stay home to look after the house and the bills and the kids etc. But you should carefully consider whether you'd be willing to live on a tight budget to make that happen.

I'm not great at Tax Credits but I think that overall you'd lose about £110 a week if one of you stopped bringing in £7,500 a year. That's after taking into account the extra £20 - £25pw you'd get in Child Tax Credits. I don't think you'd qualify for working tax credits as they taper off at around £16kpa.

Perhaps it might be worth your wife considering finding a job for fewer hours a week if that's what she wants to do?

levercleverc

waw what a response ,

would just like to thank everyone who has posted a response .Things are clearer now.

What a great resource this site is