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Tax credits - they want to give me £1000/month.....??!

(59 Posts)
stirlingstar Wed 12-Aug-09 20:12:03

I was awarded minimal tax credits last year, as we were close ish to the income limit. We're self employed and expect a significant income drop this year (credit crunch & all that). So have just received my assessment letter, and they want to pay me nearly £1000 month.

This would be fantastic. But as this is (a) a lot of money and (b) more than I even paid in tax last year, I can't bring myself to believe it. I certainly don't want a massive pay-us-back bill at the end of the year.

Is there any where I can check the calculation?
Is it feasible that I'm actually entitled to £1k/month??

(I have three degrees and I can't understand the system...)

QuintessentialShadow Wed 12-Aug-09 20:15:35

You could well be entitled to this.

What you have to make sure of is that you report any changes in your circumstances quickly. Ie, I dont know when you do your end of the year accounts, but if I were you I would ensure that they were done as soon as the financial year was over. The problem is really if you are working on estimated figures from April to January, and you in December realize that your income is going to have been a lot higher, so your entitlement will be a lot less. Then they will adjust your next years figures, and as you have become accustomed to £1k per month, you might struggle, as not only will your tax credits level have dropped, they will charge your back the overpayment over time.

iyswim.

Katymac Wed 12-Aug-09 20:20:30

try entitledto.com

I got loads last year because of the change in my SE income but I won't get nearly as much this year

ShannaraTiger Wed 12-Aug-09 20:20:45

I know it sounds hard but maybe try saving half of it in an ISA for example that way if they demand some back you won't have spent it all and got used to having it but will be getting a bit of interest.

stirlingstar Wed 12-Aug-09 20:22:33

Wow - that's a real eye opener. You could really earn £10k+ a year on tax credits. Really?

thesouthsbelle Wed 12-Aug-09 20:26:38

That's roughly how much I get, but that figure includes my child care costs as well, will yours include that? (this is based on earnings of £11K for me, as a single parent)

stirlingstar Wed 12-Aug-09 20:27:21

So is part of the large award due to the CHANGE in our income, rather than the income itself? If this is the case, then next year our award will be reduced even if we have the same income?

Saving some of it sounds like a good idea - will try.

sarah293 Wed 12-Aug-09 20:28:11

Message withdrawn

stirlingstar Wed 12-Aug-09 20:28:22

Yes, this includes the childcare bit. But our expected income is more like £25k between us.

Katymac Wed 12-Aug-09 20:29:52

That's right I got an extra £5k because my income changed (dropped) by 9K but this year although my income will be the same I will only get about £1K

Sheeta Wed 12-Aug-09 20:30:49

we've just been backpaid more than we were expecting. it's gone straight into a savings account and we won't touch it until we're sure it's actually ours (in a year grin

that way it'll pay for a holiday/months mortgage or something.

stirlingstar Wed 12-Aug-09 20:33:20

We have 2 kids, one is <1 (that seems to make a difference)

QuintessentialShadow Wed 12-Aug-09 20:36:18

No, your tax credits payments will not be reduced if your salary levels stay the same. What I mean is, your payment has increased because your income has decreased. If your salary goes up again, they will calculate that you have been overpaid from the moment your salary increased, not from the moment you report it. So for example, if you were earning 11k between April 07 and end of march 08, and you reported this salary, they calculate tax credits based on this low salary and estimate the salary to be the same for your next financial year. However, If you were then earning 45k from April 08 onwards, but only reported this in January 09, then you have been overpaid for 9 months, between April 08 and January 09. This is why it is worth being up to date with your accounting so you can report any such changes early.

GrapefruitMoon Wed 12-Aug-09 20:37:06

Can I slightly hijack and ask how it works if you have minimal income, say because you are out of work for a while and then your situation changes and you get a job - do you have to pay back what you received while you were out of work - even though you would have needed it to live on at the time?

QuintessentialShadow Wed 12-Aug-09 20:38:31

Not taking into account if your high tax credits payments have been an adjustment due to haveing reported a higher salary than you actually got. WHich may be the case? Once you are established on tax credits and your salary levels stay around the same, you wont have to worry too much about this.

stirlingstar Wed 12-Aug-09 20:39:32

Also - this year will not work a full year due to maternity leave, yet mat leave still counts as working for the purpose of qualifying for tax credits. As we're self employed, there's no mat pay other than maternity allowance (which I did get). But mat allowance doesn't count in the tax credits calc. Thus, our income looks particularly low as it's really six months of my earning spread over 12.

But yet system doesn't seem to mind this?

Thanks for all your replies - I really didn't know that the award could be anything like this much. Very glad I filled in the forms now!

Am having a moment of genuine appreciation for the labour gov...

QuintessentialShadow Wed 12-Aug-09 20:39:51

You are not entitled to working tax credits and the childcare element if you are not working.

magnolia74 Wed 12-Aug-09 20:41:17

I don't understand how it could be £1000 a month with 2 children tbh but great if it is smile

We have 5 children and Dh has lost his job which makes our earnings for this year £6,000
and our ctc is less than this sad even though I have phoned and renewed with the figures.

QuintessentialShadow Wed 12-Aug-09 20:41:20

sorry my last comment was to grapefruitmooon.

Katymac Wed 12-Aug-09 20:43:47

DH has just corrected me - apparently it was less than £3K

I was very grateful however much it was

stirlingstar Wed 12-Aug-09 20:45:15

Quintessential - thanks. I'll set a reminder now to look at our income estimate vs what I told them each quarter. Last two years had similar income - slight drop - but anticipate will be major drop this year.

GrapefruitMoon Wed 12-Aug-09 20:45:35

Oh ok didn't think of that aspect! So they really did expect a family of 5 to live on fifty odd quid a week jobseekers hmm

thesouthsbelle Wed 12-Aug-09 20:45:48

magnolia - if you're not working either of you you do get a lot less - don't ask me how they get that, but you do, when I wasn't working I had £50 per week with 1 ds. and that was all. (again lone parent with me on IS)

sad thing is they seem to give you more as a lone parent, which in the situation of being unemployed isn't really fair.

stirlingstar Wed 12-Aug-09 20:49:46

Magnolia - agree that it sounds over-generous. I'm going to call them tomorrow and ask if they can explain the calc. But maybe the issue about not getting the credits if you're out of work explains the low amount you've been given? Though this seems to say system gives a very harsh penalty for losing your job.

magnolia74 Wed 12-Aug-09 20:50:46

Its rubbish really, basically they have increased the tax credits by £30 per week even though our income is now Zero apart from Jsa sad
So on earnings of £20,000 down to £6,000 (what he earned last year and his total to date for this year) the increase is only £30 sad

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