New Tax Credit question(9 Posts)
Does anyone know how to actually work out what they should receive? I don't mean a table showing on x income you can expect to receive x amount, I'm thinking of the specific formula for working it out. There used to be on for WFTC so wanted to see one for this but can't find it anywhere.
Having finally had my payment, it is vastly excessive (it would seem to me) but the details, as shown on the IR form I need to sign, are not wildly inaccurate. Just wanted to work out for myself exactly what I should get.
There is a "calculator" on the childrens tax credit part off the INland Revenue websire, I think if you go into filling the form in there is a quick calculator as part of that.
Cut and pasted this from another site, it was posted by someone who works in another department of the IR.
After trawling the intranet site at work for well over an hour, I finally found what I was looking for! Here is the Tax Credit rates for 2003 - 2004:
WORKING TAX CREDIT £ per year
Basic Element 1525.00
Couple or lone parent element 1500.00
30 hour element 620.00
Disability element 2040.00
Severe Disability Element 865.00
50+ element (16-29 hours) 1045.00
50+ element (30+ hours) 1565.00
Childcare element - maximum eligible cost
* 1 child £135 per week
* 2 or more children £200 per week
(percentage of eligible costs 70%)
CHILD TAX CREDIT
Family element 545.00
Family element inc. baby element 1090.00
Child Element 1445.00
Disability (of child) element 2155.00
Severe disability (of child) element 865.00
THRESHOLDS AND TAPERS
First income threshold 5060
First withdrawal rate 37%
Second income threshold 50,000
Second Withdrawal Rate £1 in £15
First threshold for those entitled to CTC only 13,230
As a general rule, it is easier to work out a households new tax credits award in two steps:
1. Considering the maximum possible award for the households financila circumstances
2. Subtracting and taper based on the households incmoe.
Calculating any taper: For income up to £50000pa, the taper is 37% of the difference between these earnings and £5060 pa, where awards include WTC.
For income above £50000 the taper is £1 for every £15 earned over £50000.
If there is a reduction, it is taken from WTC work elements first, then from child care element, and finally the family element of Child tax Credit. However this is untouched unless family income is more than £50000 a year.
It's a bit hard to follow so I hope it makes sense.
Thanks PamT and runragged, will try and make sense of this. My award has been calculated based on the idea that I pay monthly childcare which is equal to a 1/3 of my annual salary!!!!!And noting that I'm a single parent.Hmm!
Can I ask a question please - we are receiving Tax Credits but dh took redundancy in August of £12k. Now he is not going to be working again until maybe January as he is retraining - he's been advised not to claim unemployment benefit or use the unemployment protection on his credit cards as we are trying to move house and renegotiate a new mortgage (with different lender) and it might go against us.
Should I say anything to the IR about this? Would they reduce the amount we currently receive (I work part-time and earn under £15k) or do you think they would increase the Tax Credits we are currently getting?
When the £12k is added to what he has already earned will it total more than he was expecting to earn within the year?
On your award letter it tells you what the maximum/minimum boundaries are for your earnings before you have to let them know. His redundancy payment will appear on his P45 (won't it???? I think it will), so they will know about his income and you shouldn't lie or you will be penalised in the future.
If you are overpaid this year, you will have it deducted next year. You also risk being prosecuted for benefit fraud as a worst case scenario.
Also, I don't know if you are claiming child care benefit, but this is only available to families where both parents are working (or possibly in full time education) for at least 16 hours per week. If he is taking a break before his training you would not qualify for this period.
Hi Pam, thanks for replying. I looks as though DH would have earned less in total over the year, so I guess our earnings would fall below the minimum then (finally managed to dig out the award letter, should have done that in the first place). Wouldn't have lied (I'm a terrible liar!) so will give them a ring to let them know the changes and hopefully we will be a bit better off - thanks again!
I have just been to the IR website and done their calculation on whether I qualify for tax credits / childcare credits, when I go back to work. Its given me an amount but doesn't say if this is weekly, monthly or yearly - any one know?
Probably yearly, Lisa78.
One thing to keep in mind... usually the calculator tells you what you would get paid for the rest of the year, not what the annual total would be -- so you may be entitled to 4x as much as the calculator just told you.
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