To think the tax credit system is an utter shambles

[NormanTebbit]

we have just received a bill asking for nearly £2000 in tax credits to be paid by end of September.

When DD1 was born seven years agowe received tax credits as DP only earned £10, 000. The following year he earned £30,000, then nearly £60,000 self employed. We got tax credits the first year but since then have had nothing even though we have two more children. We have simply been 'paying off' the credits we were initially given. Neither of us mind this at all.

DPs income is now back to around £30,000. We have a tight budget, high mortgage, high power bills, etc etc

And now they want £2000. I could weep. Seriously.I would rather not have had any money off them at all.

How is this system helping anyone?

The problem is that they don't apply updates to income quickly enough so unless you have the same income all the time (which a lot of people don't - maternity leave, promotions etc) there is a lot of potential for them to overpay. Sounds very annoying - surely you don't have to pay it all at once?

Over 12 months, so roughly £200 a month. That money is already being used to pay my OU course fees - I complete next year and then start an MSc in speech therapy.

It's lucky I have an interview for a call centre job next week working evenings, nights and weekends, but looks like a third of the pay will go paying tax credits.

I didn't realise I was effectively getting a loan not a benefit.

maybe thats what it should be, a loan, expected to be repaid when things are less tight

yes they are a shambles, the whole thing needs a good look at

But I don't understand the system - did I get any benefit at all? Was it always a loan? Was it because of DP's 'bumper'£60,000 year? I just don't get it. What if he only earns £10,000 next year?

If it's a loan perhaps they should put in big red letters "we can ask for this money back at any time at our convenience, under whatever terms we feel fit."

Perhaps they should start asking for dole back once people get jobs.

Have you disputed it Norman?

Dispute

Thankyou saggars

I will dispute it tomorrow but need the details of DPs income etc.

Am going to open the

What I don't like is that if you have been overpaid, they can claim it back at any time, from any length of time period. Yet if you have been underpaid, they will only pay back three months from the time you have notified them. Surely it should be the same rule for both. I'm sure they wouldn't make so many mistakes if they could only claim back 3 months' worth

The previous system, working families tax credits, was a much better system as your award was updated every 6 months. At this point your award was fixed, so even if your income went up you still got the same amount within that period. It was impossible to be overpaid unless you gave them incorrect information, or they made a mistake (which appeared to happen much less frequently). If your circumstances changed, entitling you to more, within this 6 month period then you could reapply. I don't know why they couldn't have continued with this system, it made so much more sense.

In principle a fantastic idea, in practice it doesnt work and causes more trouble than it solves, and the thresholds arent high enough, and never have been, unless they raise the 40% tax bracket.

The 40% tax bracket is irrelevant in terms of tax credits...

no it isnt, because they dont take into account how much money you have AFTER tax. we really struggle for money because we are just over it, but we end up with very little difference. My net income comes in below what the government say an average family should live on, but because they do everything on Gross income, we get bugger all! particular bug bear of mine!

Babe the tax threshold is the same for everyone, you are not being hard done by....

OK, I see what you mean. But your net income will still be higher than most other people's net income, so I don't really understand how you can say that yours is below what the average family should live on???

Also, most people (unless they have large families) find that their awards are reduced to the basic amount of 10 GBP a week when their incomes are still well below the 40% tax band.

The dependents allowance for students takes into account housing costs, in addition to the number of children which I always think is quite sensible as this can make a huge difference to the amount of disposable income of people on the same salary.

yeah they do now, but the original system was much better in principle. It could have been really good if it had been better organised.

If i lived in a council house, sold the car (We live 7 miles from the nearest main town) and quit job we'd get them, because we are trying to buy our own house and support ourselves, we arent eligible. I have £400 per month to feed and clothe five of us.

Im a trained budget coach, so believe me Ive tried everything!

I don't understand how you've been overpaid if you only got money for the year he earned 10,000. Surely it doesn't matter what he earned in other years if you didn't claim in those years

That seems a fairly reasonable amount to me and more than a lot of people will have.

what when its 7 miles to the nearest supermarket (and yes I shop online) plus clothe the kids, buy fuel, add to that the running costs of the car, plus school bits and bobs, and anything else that crops up (birthdays, household maintence etc etc etc) believe me where I live thats really not much at all!

If you have an overpayment they tell you what year its from and why. If you have gone up in income above the disregard or had your aware based on estimates then this is likely to be the cause.

OP, if your dh's income is down to 30K and you have 3 children then my quick calculation suggests that you should be entitled to about 3000 GBP this year. Are they assuming that he is still getting about 60K a year? Have you told them that your income has gone down?

No, it's not for all that, but you said feed and clothe, not for all your spending. Presumably your housing costs are high. Yes, that's tough but then if you're buying your own home you will have something to show for it and the end.

I feed and clothe 6 on about that!

Well it kind of automatically renews and our circumstances hVen't changed apart from babies. DP will submit his earnings every year but there is a delay between tax credits calculations and his submission of earnings inJanuary.

• basically the system is fine if you are both employed and salary doesn't change much. The minute you are both self emoyed it becomes very complicated as DPs salary fluctuates according to contracts etc.

Anyway DP reckons they are trying to scare us so he is phoning tomorrow to see what the situation really is. Our circumstances have remained steady for last two years so hopefully they will accept that and just take the money they should pay us to pay the overpayment ( which is what they have been doing for six years now)

it is hard, babe. We've been in the same situation. We effectively have to declare what dhs bonus and my bonus might be. So we have had some tough times as our mortgage was stupidly high.

Therefore we are over the threshold potentially, based on what might occur.

They have since said base it on last years earnings, as normal. Well these have been over 40,000 combined. They know this and are still paying us wtc

I'm too scared to call them in case they start demanding money back, from god knows when.

The whole thing confuses me.