Tax credits

[sunrayscome]

Made such a mess of things. I am on a salary of £23'000 - work for social care. During the pandemic I worked a lot of overtime - wanted to do my bit for society and work were encouraging us to do as much overtime as possible.
I have received my annual renewal for tax credits and my P60 states my income was 24'700 as they calculated the over time into my salary
I now have an overpayment of £1'700 and tax credits have been reduced from £57 to £5
I can not make ends meet as tax credits will now base my salary on what it is not for the whole year and feel so stupid that I have let my daughter down - a colleague who is in receipt of tax credits and worked as much over time as me has not been penalised though?

Supporting your daughter yourself is not letting her down. Can you carry on with the overtime or increase hours?

I am already working full time and the overtime has dried up now that the pandemic has eased.
I was taxed so heavily on the overtime that I did - stupidly I did not think it would affect tax credits as HMRC already took half of what I earned. The overtime that I did had no major impact - just swallowed up in bills - my income does not cover outgoings and I have already sacrificed so much, don't go out, don't drink/smoke - no gym / hairdressers, clothes etc

In exactly the same boat. Completely and utterly exhausted, burnt out and financially worse off. Appreciate unprecedented times and couldn't let people down, but cried when I got that brown envelope through the post. Happy to pay over payments back, but the stress of trying to get the right payments back on place is enormous. So sad that others are being penalised for doing the right thing and stepping up as well.

That doesn’t sound correct. Wages are not reduced £1 for £1 with tax credits. Also £20 of the £57 reduction is due to Covid payments.
Do you give aid any money to charity as you can deduct that from your income.

@SugarPlumFairyCakes
Bless you - I am sat here in tears. Have been working from home for a year now - on a chest of draws and a kitchen bar stool. Work have not even provided equipment so I was hoping to save for a cheap desk and chair from the overtime as we are not going back to the office. Ironically I was calling people to ensure they were ok and had food / access to money. care etc and now I am thinking of ways for me and my daughter to survive.
Not only my mental health has been affected by all of this but like you say I have been penalised for helping others in a pandemic.
Like you I felt sick when I saw the letter - I won't get my payments back on track for another year now - I am going to tell my employer what has happened so that this never happens to anyone else

Right, you need to work out the following:

• what was the exact income figure they were basing paying your tax credits last on year? Was it 23k?

If so, what did you earn in the previous* (I.e 19/20) year? Was that also 23k?

You are allowed to earn 2.5k more than the previous tax year without issue - this is called the income disregard. Thus you shouldn’t have an overpayment.

Next time, please put any overtime payments straight into your pension! It avoids all this hassle.

@SugarPlumFairyCakes
Like you I said I would pay the over payment back so that I can get the weekly payments back on track and to be able budget but they said my weekly payments are only £11 now due to my income being 24'700 so no point

Well this doesn’t sound right.

How can you have only earned an extra £1700 but been taxed so much more?

Call tax credits and explain the situation and ask to spread the pay back over a longer term. They’re normally very happy to do this.

Also I think you need a word with payroll or HMRC.

As others have said, based on your information that is not correct you need to check your previous notice to see what income 2020/21 was based on.

There is some detail missing, I think. Has your income risen to £23,000 from another amount in the last tax year? The first £2500 of increase is ignored. Also, even if your increase of £1700 was fully counted, your overpayment would only be £697, because it's only 41p out of every £1 that is deducted.

That sounds like a horrible situation, Op. Why isn't your organisation providing home office equipment as well?

Worked example

18/19 - earned 20500. Tax credits are correct for this sum.

19/20 - earned 23k. Tax credits are based on earnings for previous year. No problem, because it’s exactly 2.5k more

20/21 - earned 24700. Tax credits based on 23k (previous year), again this is within the 2500 so no problem.

Now, there is an issue for 21/22. Tax credits based on 20/21 income of 24.7k. If you are back to earning 23k, then they’ll still base it on 24.7k because the disregard works both ways. No overpayment but your tax credits will drop. Next year, they’ll be back to being based on 23k.

The way to avoid this is to always make sure your income is the same, by putting any extra into pension.

Thank you for your advise - will go through past paper work but the explanation I was given this morning was that my P60 will show what over time I have worked and that is the income that tax credits will calculate payments on

@Motnight
they said it is our responsibility to purchase a desk and chair -
and this is the county council !

You can complete a form online think its call a financial hardship form. You put in your incomings and outgoings. This goes to the tax credits and they may allow to pay back the overpayment over a longer period

You P60 will show all your taxable earnings in the year. Overtime isn't treated any differently. You wouldn't have paid any tax on the first £12,500 of this but you would have been taxed at 20% on the remainder.

What was your P60 amount for the previous year?

With respect the information you were given would have been from a call operator and although technically correct in saying your tax credits is based on taxable income they are just giving you the standard reply, they would not be doing a calculation on that call or checking it.

Unless it was a call following a reconsideration and then they would have explained the figures and breakdown or rectified it. (Hopefully)

Can't you ask them to assess you on this year not last? We have done that in the past.

[quote sunrayscome]@Motnight
they said it is our responsibility to purchase a desk and chair -
and this is the county council ![/quote]
That nonsense, if they want you to WFH, they have to provide all equipment. In fact do they pay anything towards your telephone and Broadband and electric?

is that your calculation of £1700? Are you just taking that as the difference between 23k and 24,700? If so, that;s not correct

As others have said, there is a disregard of £2500 for rises in income from one year to the next. And secondly, you only lose 41p in the £1 for each additional £1 of earnings, not the whole amount.

Same here.... worked overtime last year to help with staff sickness as a exult of pandemic and not compromise patient care, and tax credits have sent through 2 letters with 2 different amounts owed I have no fucking idea what is being taken and what is owed. It's a shit show!

Op if you pay into a work pension make sure that is disregarded. They are sneaky and won’t tell you if you don’t know

Previous year it was 21’083

So a difference of £3,617 between 2020 P60 & 2021 P60.

So the overpayment for 2020/21 will be around £457

But there is also likely to be a slight in-year overpayment from 6 April to date for this year - so they will adjust your payments for the rest of the year and you will need to make sure they know what your estimate is for this year.