Tax Credits.

[TaliZorahVasNormandy]

I dont know if anyone might have any knowledge about this, but my working hours have decreased from 26 to 24 hours a week, just until things return to normal, whenever that might be.

My tax credits have gone down in April because I had a jump in income between last year and the previous year, which I expected. But now my income has gone down because I'm working less.

I went on my gov account to update my new hours, which I'll change back when my normal working hours resume. It asks if my hours have changed due to Covid-19, which they have and when you say yes, it says your working tax credit wont go down and you wont need to inform us of the change.

But, surely if you were earning less, your tax credits would go up, unless your hours went under the qualifying criteria?

I'm currently £160 down on my monthly income due to the tax credits and income dropping.

Anyone else a bit confused by it?

Tax credits don’t work
In real time. Sorry it adjusts next year

Leave your hours as they are and adjust your estimated income for this current tax year 20/21. It will recalculate based on your new estimated income. You are still entitled to the WTC based on working your usual hours but with the reduced income.

I know its difficult to predict how much you think you're going to earn as we dont know how long we will be working reduced hours, but you can amend it again to keep it on the right track.

Do you know if you were overpaid last year? They may also be reducing your tax credit amount to repay any overpayment. If this is the case you can call and ask to see if they will reduce the % at which they are recovering the overpayment if you are struggling due to loss of income and reduction of tax credit payments.

A drop in hours for a couple of months won't make any difference to your tax credits as they are based on annual income unlike universal credit. They only increase if your income goes down by more than 2.5k per annum. I know this because a while back I changed jobs and my salary decreased by 2k, I had to wait until the following year for the increase in my tax credits.

It will be adjusted next year as they work on last years income.

Thanks everyone.