Tax credits again

[GoodEggBadEgg]

Can anyone explain the withdrawal rate? It is 41% (was 39% apparently)

Does it mean that once your income hits the £40k threshold your Tax credits drop by 41% or is it more complicated than that?

Are my benefits (CHB, DLA, Carer's Allowance) taken as part of our income for TC purposes?

Dh earns 40k, I receive 2.8k in the above benefits for our 4 dc's. Out ctcs appear to have dropped by £500 a month - from £809 to £288. Haven't had this years notification with a breakdown, just a note at the end of last years award notice with those figures.

I'm sure they'll be plenty along with the 'you don't need tc's with that income' and I have my hard hat donned for that but I genuinely have no idea how we will manage losing £500 a month, we struggle every month as it is. But i'm not asking for advice on that (yet!) more with the technicalities of the calculations.

This leaflet explains how awards are worked out. The actual amounts have changed, so if you replace them with those from this page you should be able to work out the correct award. Alternatively enter your details onto entitledto.com - the tax credit calculation is very accurate IME. Child Benefit isn't counted as income for tax credits. not sure about DLA and CA, but entitledto should help you with that.

The withdrawal rate means you lose 41p of tax credits for every £1 your income is above £16,190 per year. (For elements except the family element)

You lose 41p of tax credits from the maximum for every £1 of your income over £40,000ish for the family element.

Baby element is withdrawn.

www.litrg.org.uk/News/2010/April-2011-tax-credits-changes

If you have more than one child there is basically no way to check the calculations yet - everything just says it depends upon exact family circumstances. Also the online calculators don't all say the same thing so I would only rely on those for an estimate.

You shouldn't be lockets, on that salary with 4 dcs you should still be getting something.

vj32 it is perfectly possible to check entitlement; both entitledto and the HMRC one have been updated to reflect the recent changes. And you can always do it yourself using the information in the links I gave.

They're wrong. This is the calculation:

Maximum tax credit entitlement based on 4 children will be a combination of:
? Child Tax Credit - family element (£545) and a child element (£2,555 per child), giving
£10,765, and
? Working Tax Credit - basic element (£1,920), couple element (£1,950) and a 30 hour
element (£790), giving £4,660.
A total of £15,425.

Award is worked out as follows:
Annual income £41,500.00
Less threshold ?£6,420.00
Excess income £35,080.00
Maximum tax credit £15,425.00
Less 41% of excess income ?£14,382.80
Award £1,042.20 annually

When you have dc5 it should rise to £3597.20

You can double check this on the calculators, it should be pretty much identical.

Lockets - we do get an extra amount as ds3 gets higher rate dla but your calculation does. Seem low

Have spoken to them now and was told as our income went up considerably last year (we lost our business early 09 and were both then out of work for 18 months) it is a combination of that and the new changes that have made the difference. I don't know why they didn't change the amount when Dh found work but they said they didn't make those changes til new tax year. Although our ctc did change then by around 600 a month so no idea what they're on About really.

Thanks for the replies, the calculations are a bit easier to work out now with that info.

Your award is usually based on what you earnt in the previous financial year. So your 10-11 award would have been based on 09-10 income and your 11-12 award will be based on 10-11 income (there are some exceptions but this is generally how it works).

I have no idea why they're saying you're not entitled, but honestly the figures I've given you are right, based on an income of 41.5K and for 4 children under 18. I've manually done the sums and the calculators agree. I wonder whether the operators are just being told that people with incomes above a certain level will not qualify, when it actually depends on how many children you have as well (and whether you have childcare costs).

No, I don't work for them, but I have been manually calculating our award for the past 6 years (after receiving an overpayment) and have always got it to within a few pounds of the actual one (which is to be expected as the figures above are yearly ones, but the actual figure is based on number of days each year and have had children born part way through the year).

The calculator on their website certainly appears to be up to date based on the figures it's giving out and entitledto.com also states it has taken into account the tax credit changes.

I can't explain it, but hopefully it will resolve itself when you reapply when your new baby is born.