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Tax credits question

(4 Posts)
workaholicsinglemom Sat 13-May-17 17:42:45

I have a question regarding tax credits .... If I start the tax year on- for example a salary of 20k and I am receiving tax credits based on this salary and half way through the year I have a huge pay rise to say 40k. - which would mean I am entitled to zero. If I stopped claiming at the point my salary increases would my tax credit claim be based on my entire years salary at the end of the financial year or would it end at the point I inform them my salary has gone up and I no longer wish to claim?

Leatherboundanddown Sun 14-May-17 08:08:02

It ends at the point of increase when you cancel.

SheRaaarghPrincessOfPower Sun 14-May-17 08:11:47

We had similar a few years back, salary increased and I stopped claiming, but they claimed overpayment and I had to pay back most of it. Still don't understand how they worked it out..

HeidiSpeidi Sun 14-May-17 08:15:30

Payments would likely stop as soon as you tell them the new estimate however it's also likely that once your estimate is confirmed at end of year, the amount you were paid whilst on lower salary will have been overpaid also.

So say your estimate was 20k and between April and August you received 3k in Tax Credits.

In September you ring and increase your income estimate to 40k. Your payments stop

In April/May of the following year you confirm your actual income as 40k.

When the renewal is finalized you were not actually entitled to the 3k paid to you between April and August of the precious year. Leaving you with an Overpayment of 3k which would need repaying.

Does that make sense?

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