To think HMRC would inform us about changes to tax credits

[noisytoys]

I saw this morning from various sources (FB, a thread in money) that tax credits have been reduced for a lot of people with no notice. I checked my tax credits which went in today and lo and behold, £94 every 4 weeks reduction. There is no more I can cut. I can't afford to live now. I thought I would put this here for traffic because I fear millions of people will affected

Most people will by my reckoning only get about £30 a month more with the new personal allowance. I don't claim tax credits. Why are they being cut. Is it because of the new £500 a week benefit cap.

I didnt realise there was a new personal allowance. Does that mean we should see some more money on the wage slip at the end of the month to compensate for the drop in TC?

foxy your drop is likely the second adult award; you won't be entitled to it if he no longer lives with you - but they should have told you x

I read somewhere that the longterm plan is to reduce tax credits and raise the income tax threshold so that low paid workers keep more of their money rather than having to pay tax and then claim it back through tax credits.

Tax credits aren't a 'tax refund'. Someone earning over £10000 per year will benefit from the rise in personal allowance. Those Tax Credits claimants who earn less than £10000 may not get a benefit from it at all, depending on their wage.

Tax Credits are calculated from Gross earnings anyway, so how much you get after tax is irrelevant for their tax credit award.

Szeli there is no second adult award in tax credits. The allowance for couples and single parents is exactly the same, £1970 this year, £20 up on last year. Table here showing changes in tax credit elements

Mine go in on a friday so I hope I don't get a nasty shock tomorrow as I want to pay the nursery bill and money is already tight.

I have to say that the news has been covering bedroom tax, DLA and council tax changes (none of which affect me) but I've not seen any reports on changes to tax credits. I got the impression they weren't tinkering with them.

They aren't, Meglet. There's a freeze on some elements, and a slight increase in others. There are no reductions that I can see from that table.

Except for the disregard, of course.

Well all I can say is that you are lucky to have the choice then Koyangwuti

Some people don't have that "luxury" and are dependant on tax credits.

Im worried about tomorrow too as I get my TCs on a Friday. Ive heard others have been cut and I have no idea about mine. I did look on entitled to and got that there was no change (or at least not much) so Im not sure. I did look for a letter but there was no letter in the cupboard where I put these sort of things.

well tomorrow I will know.

I don't understand.

I've read quite a lot of the changes and have heard nothing about changes.

So looking at the pdf (thank you to the person who posted it), unless our circumstances have changed then there should be no change to our tax credits?

For those who are worried and can't cut any more, could you earn more in an ad hoc odd job way? Could you ask around if anyone needs any cleaning doing? Or ironing? Could you walk dogs for elderly neighbours? I've been doing some of this sort of thing lately to top up our income as we have had a lot of unexpected expenses (vet bills, appliances breaking, car repairs etc). It has been a massive help and has kept us in the black so to speak!

Changes in tax credits at this time of the year are detailed on the previous year's tax credit letter. They normally change at the beginning of April to try and stop you being overpaid. In my letter last year it says we will receive £xx every 4 weeks and then from 4th April we will receive £xx a week (which is less).

What is the the disregard? I never understand that term when it is used

Mrcrumpswife, the tax allowance is going up by approximately 1,300. So this is probably less than £30 around £22 more in your pay if you are a basic rate tax payer. Which isn't exactly a lifestyle change! I'm still not quite sure why tax credits are being cut. I've not seen much about this on the news.

Did you have to set up as self employed hm32 because thats whats put me off doing it and is it hard to set yourself up as a mini business?
I wouldnt dare do cash in hand as we live in a small community who do love a gossip and of course its morally wrong

Thedisregard has been reduced to 5000 this tax year so this makes it reaally hard to budget ESP if you are SE

hm32, some great ideas there. Just remember that any income you get in that way is also taxable and should be declared on your tax credits renewal forms, to stay within the law.

For every £10 you earn, £4.10 will be deducted from your tax credit award. If you are within taxable earnings, £2 will be deducted for income tax, and £1.20 for National Insurance. That means that you will keep £2.70.

If you are eligible for housing benefit, then that £10 increase of income will result in a loss of £1.76 from your award. Similarly, if you receive council tax reduction (what was council tax benefit) and your local authority have kept the 20% of net earnings calculation, you will lose £0.54 from your council tax award.

Your overall gain from £10 increase in income, should you be in receipt of tax credits, housing benefit and council tax benefit, if you stick to the rules and declare your earnings, will be £0.40

lougle I had no idea there was so little point working if you are on benefits! We are not eligible to claim anything, so just lose the 20% income tax etc which doesn't make it too bad tbh.

Oh dear, by the time i factor in any childcare, thats a no go area then.

carriedaway the 'disregard' is the amount of increase in earnings that they will ignore when calculating your tax credits.

If you earn £10000, your tax credits will be based on that.

If you get a payrise, taking your pay up to £12000, HMRC will ignore that payrise for the first year, and calculate the tax credits as if you were still earning £10000.

The following year, they would use the £12000 income to calculate the tax credits.

They will disregard each year, so if you then got a payrise to £15000, you'd get one year grace and have your tax credits calculated as if you earn £12000, then the following year, they'd calculate on the £15000, and so on.

It used to be £10000 disregard, but they've reduced it to £5000.

Just googled disregard and it still makes little sense.

Is this it:

Income for 2011-2012 was £2000.
Income for 2012 - 2013 21000.

Because the increase is less than £5000, it is disregarded?

This disregard used to be £25,000. Then £10,000. Now £5,000.

Is that right?

HMRC estimate what your 2012/13 was using a cost of living rise, you complete the renewal form with the actual figures in approx June time using your P60's with the actual figure.

In the mean time though you can contact Tax Credits with an estimation of what it is likely to be so that you avoid under or over payements.

Tax credits had estimated that I had had a pay rise in line with cost of living as many people do, however in reality I unfortunately did not get a pay rise so the figure was wrong, I have rang them with an estimation of what my salary was last year, I had my earnings up to 31 March on my last pay slip and then added another weeks wages on to that, so they are recalculating it.

The salary figure they were going use is on the last letter sent regarding your award along with the likely April 2013 payments.

There were also very few of the tax credit elements that were uprated this year so many of the figures to calculate have remained the same. Some of the elements that were uprated were only £20 for the couple and lone parent element, £65 for disabled worker element, for example. There was a couple of others.

This means that anyone who did receive a pay rise may well get less.