Tax credits. Aaaaaghh!! Help please

[aninkynonkadinkydonk]

For the tax year 2011/2012, I was on statutory maternity pay for 30 weeks. We phoned tax credits and explained that we would be struggling on stat maternity pay so they calculated our entitlement based on the income we would be earning for that period. Lots of problems regarding the final decision for that year as they didn't take of the £3000.00 for maternity. Currently going through to review as this is our fault apparently. This would mean that we owed £1500.00 back to them. If it all gets sorted then we should owe them £400.00 back.

Here is the problem, we got the allowance through for this year, which correct me if I'm wrong should now be based on 2012/2013 predicted earnings. Jointly we will earn £29000.00, have one child and no childcare. According to the tables and the government we should be entitled to nothing. It states on the document our earnings for this year should be £290000.00 and yet they are saying we are entitled to some tax credits. How can this be?

Do you think they are calculating our entitlement from our earnings from 2011/2012 instead of the current year. If so this means they are paying us for last year twice, ifyswim. I am petrified that at the end of this year we will have an overpayment again.

Do i wait for a reply for the review from last year or shall i ring them again.

Any help would be appreciated

I would ring them and ask for clarification, it doesn't sound right to me and If it is wrong you will have to pay it back so why take the risk! We are currently paying back an overpayment we received during my mat leave and as we are no longer entitled to any tax credits it is just yet another direct debit to pay!

Your tax credit award is normally based on your previous year's income. If your income is more than the previous year then you're are allowed to earn up to £10K more than in the previous year before it affects your award.

eg say your income was £20K last year and this year it's 30K - because your income has gone up by £10K or less then your award will still be based on the £20K you earnt last year. Next year your award will be based on £30K even if you earn up to £40K.

If your income has gone up by more than £10K then they will take £10K off your income for this year and base the award on that.

eg. say your income was £20K last year and this year it's £31K - your award will be based on £31K minus £10K ie £21K. Next year it will be based on the full £31K

Hope that makes sense!

PS When you say they didn't take the £3000 off for the maternity do you mean that you declared your full income without taking off the £3000? If so they're quite right in saying that it was your responsibility to work out your income after deductions, it's all clearly explained in the renewal guidance which comes with the forms.