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Original poster

OMG...Tax credits gone down WHY?

83 replies

bjf1 · 17/03/2012 09:48

Received a letter this morning. Tax credits going down from £6,000 per year to £311.00?
How do they work that out?
Income same so am confused.

OP posts:
LST · 17/03/2012 21:00

I haven't had a letter telling me that they are stopping though?! I am actually really worrying! I'm on Mat leave until July. If this happens I will have to go back to work now! Sad

ThunderboltKid · 17/03/2012 21:07

This reply has been withdrawn

This has been withdrawn at poster's request

LST · 17/03/2012 21:11

Thunderbolt is that aimed at me? I thought I was entitled?

ThunderboltKid · 17/03/2012 21:14

This reply has been withdrawn

This has been withdrawn at poster's request

LST · 17/03/2012 21:14

Sorry sorry BlushBlush! Just read post you were talking about.

ThunderboltKid · 17/03/2012 21:17

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This has been withdrawn at poster's request

Eddas · 17/03/2012 21:26

What you need to be looking at is what has gone on his tax return.

The usual thing to happen with a Ltd co is the director takes a small salary which covers the NI threshold but you don't end up paying any NI/PAYE, think it's something like £600/month. Then the rest of the money taken is dividends.

Dividends are taxed by the way, 10% is deducted at source, so if he is taking £2k a month as a dividend, this will be the net figure and the gross figure is £2.5k per month.

You don't take off the personal allowance.

You should dig out the tax return paperwork and if you don't understand the figures to use you need to speak with your accountant.

Original poster
bjf1 · 17/03/2012 22:42

blimey Eddas, it sounds like you have a lot of book keeping experience. THANKS.

OP posts:
NeshBugger · 17/03/2012 22:54

Sorry to jump on the op's thread but I believe, but cannot find how to calculate this, that I will lose my working tax credit of about 3.5k?

I work 18.5 hours or 3 days a week as a teacher, earning 23.5k before tax. I pay out 10.5k in childcare.

My employer cannot magic me the extra day I need to work to qualify for the new govt criteria and if they did, would I then lose out on the child-tax credit that, fingers crossed, they are still going to pay me to cover most of my childcare?

NeshBugger · 17/03/2012 23:07

I followed the link through to the Inland Rev site but it was broken, but the MN's own page worked (thank you for drawing attention to it in this thread) and am losing about 1k according to their calculations which might not be much to some but it is a lot to me.

Eddas · 17/03/2012 23:08

bjf1 Grin i'm an accountant!

Nesh, I think it depends on if you are a joint or sole claimant re the working hours thing. There's another thread on here which gives more info.

NeshBugger · 17/03/2012 23:09

I'm a sole claimant. Any links to a thread would be really appreciated. I know so little about this.

Eddas · 17/03/2012 23:10

oh and I think I was a bit off with my divi calc earlier Blush

£2,000 net would be £2,222.22 gross

but let me off as it is saturday night Grin

Eddas · 17/03/2012 23:14

nesh have a look at this thread

with all the changes i'm not 100% sure on how it all works going forward, only that from my personal point of view I don't get them anymore Sad but I only got the basic amount so it's not much a month to be losing (but enough)

I really ought to get up to speed with it all but maybe not tonight...

Original poster
bjf1 · 17/03/2012 23:18

Oh Eddas, wish I had your brains!

OP posts:
Eddas · 17/03/2012 23:21

lol no you don't!!

QED · 17/03/2012 23:22

NeshBugger as far as I can tell if you are a sole claimant then the number of hours you need to work for WTC stays at 16 from this April. Things will probably change when Universal Credit comes in from 2013 but it stays at 16 hours for sole claimants for now.

NeshBugger · 17/03/2012 23:54

Really QED? Was so sure it was this April and that's a massive, albeit temporary, relief as it gives me a bit of breathing space. Am planning to move to reduce my commuting time and costs which should help long-term.

If I was able to work more days and my overall income increased at what point do they start tailing off the child-tax credits?

NeshBugger · 17/03/2012 23:55

Thank you Eddas Smile, will bookmark and read tomorrow

QED · 18/03/2012 00:10

This shows that it is only for couples where you need to work 24 hours between you (with at least one person working 16 hours) to get WTC from April :) So as a sole claimant definitely OK from April to still be working 16 hours a week.

There are links to how your income changes what tax credits you get here but these are only up until April 2012 so not a lot of use at the moment really. Will be nice when they get updated.

DaisySteiner · 18/03/2012 09:21

Yet again (!) here is the link to the calculator which tells you what you will be entitled to from APRIL 2012.

HTH.

QED · 18/03/2012 09:31

Is that calculator for April 2012 as it starts talking about changes to happen in April 2011 such as household income needing to be below £40k and childcare going down to 70% instead of 80%. The links to discussion are also from April 2011.

Have now tried it and looks like the calculator is for 2012/13 but possibly updating the text at the beginning would help make it clearer, as I am probably not alone in thinking that it was for 2011/12

Original poster
bjf1 · 18/03/2012 11:39

This thread just proves to me once and for all how bloody mindbendingly confusing this whole system is.
Everyone seems to be unsure of what's happening when, how it will affect them, what to do next, etc.

OP posts:
QED · 18/03/2012 11:49

I agree. One new thing I have learned today from the MN link is that the income disregard is going down again from April to £5,000. So it used to be if your income changed by up to £25,000, you would still get tax credits based on the old income for a year, now it is £10,000 and from April will be £5,000. Plus if your income goes down by up to £2,500 you won't get any extra tax credits.

bjf I hope you get it all sorted out.

DaisySteiner · 18/03/2012 12:55

The MN link is actually wrong about the income disregard - it doesn't fall to 5K until April 2013. See here

The income fall disregard is horrendous, truly appalling and I can't believe there hasn't been more in the news about this.