Tax Credits

[HootyMcSnooty]

Hi, hope someone can help me. My DH works part time and does most of the child care (2 DC), I used to have a job that paid around 40k. Last December I was made redundant and took a job that paid just over 200 pounds a week and because of that we get around 170 pounds a week tax credits.

I have just been offered a job that will start in January for 35k a year. I called the tax credit people to tell them that my circumstances will be changing. They told me to tell them after I start but that I will have to pay around 4000 pounds back!

Is this right? The money I got as tax credits was used keeping us going not spent on holidays or anything but on bills and mortgage and food? There is no way I can take this job if I have to then repay 4,000 pounds?

Appreciate any help.
H

Can you work out what your total household taxable income for 2013/14 will be if you take the 35k job in January? If you then run that number through the benefits checker at www.turn2us.org.uk you will get a good idea of what your new award would be. If it turns out you do have to pay something back you can stagger the payments.

well done on getting a good new job!

the 4k figure sounds pretty unlikely to be right to me. You will only have the new well paid job for 3 months of the year. I am wondering if they assumed you were going to get the tax credits paid for the rest of the tax year and then they would claw them back as overpayments?

If you do get paid any tax credits after you start work, do not spend these but put them into a differnet account, because they are going to want those back!

But def take the job. If in the end you do owe HMRC some money, you can get a sensible repayment schedule agreed.

If your joint income for the tax year 2013-2014 will be over about £32k then that means you should not have been entitled to any tax credits so will have to pay them back. As you have been getting such a lot in tax credits it is highly likely that you will have to pay that much back. They will allow you to set up a repayment plan, they won't expect it all in one go.

You should take the job, as you'll be getting almost double your current salary + tax credits. I think they work out the new tax credit award around the end of July so you mightl have time to save up a bit, and then you can work out a repayment plan for the rest of it.

Congratulations!

Under this government the less you rely on tax credits the better :(

We narrowly missed such a situation this year because they said our tax credits would stop but to avoid financial hardship to us they would just keep paying them and then recover them next year. I called them up and told them to stop paying them because it would cause me even more financial hardship to have to come up with money to repay in a year's time. It's a ludicrous approach.

I'd just call them back to clarify.

Surely that can't be right? If you're earning the lower amount at the moment then you're entitled to the tax credits? Then when you tell then in Jan about the higher paid job they would adjust you're payments then. If you've earned £200 per week for approx. 9 month of tax year (so roughly £7800) then on £35k for the other 3 months (£8750) then that's an income of £16,550 for the tax year so I wouldn't think that takes you over the limit for claiming?

"If you've earned £200 per week for approx. 9 month of tax year (so roughly £7800) then on £35k for the other 3 months (£8750) then that's an income of £16,550 for the tax year so I wouldn't think that takes you over the limit for claiming?"

it is a joint claim so OH's part time income needs to be added. That would have to be pretty well paid to take them over the limit for any tax credits, but it's possible that they will have been paid too much. It also depends on what their income was in the previous tax year and the disregards are complicated.

Bottom line - 4k seems a lot, it could well be less - but even if it is 4k, Hooty will be better off taking the new job and scheduling repayments at a sensible rate.

Taking the disregards into account as well, op's partner's earnings wouldn't need to be much to put them over the limit. The threshold for 2 kids is about £32K, the diregard I think is 2.5 k, so if op's partner earned more than about £13k, they will have been entitled to nothing for the tax year.

Sorry I think the diregard for income increasing is £5k, so the first £5k of increased earnings shouldn't affect tax credit payments. It is £2.5k if earnings are decreasing.

"Sorry I think the diregard for income increasing is £5k, so the first £5k of increased earnings shouldn't affect tax credit payments"

but the increase that matters is over the last years income, not during this year - we just don't have the figures to estimate this well but income may well have fallen this year so the disregard won't kick in. It's very complicated.