Sorry - another Tax Credits thread.........

[fannyannie]

Can anyone give me any idea on this one???

when we filled in the TC renewal thingy last April DH and I had both only worked for 6 months of hte previous tax year. So naturally we put in what we'd earned. Now we'll have been working the whole tax year and it's only just occured to us that we'll have earned nearly double what we earned the previous tax year (as we didn't change jobs or get 'pay rises' per se we forgot to add in the fact that we'd be earning more.

Now - obviously we're going to have been over paid. Will they want all of this money back in one go - or will they simply take off what we've been overpaid from next tax years credit award.......which is going to be completely cocked up by the fact that I shall be on maternity leave for most of it - thus making our incomings considerably lower than they are this year.........is anyone with me????

They will significantly reduce your payments for the next tax year and will recover remaining overpayment from future years. On the upside you can still claim childcare costs if you are on Mat leve and if you are earning LESS this year you will get more TCs next year when you have another mouth to feed, more shoes to buy, etc. If they don't know how much you are expecting to earn in the 06/07 tax year, it may be worth ringing them up now to clarify your situation, and if you have been overpayed, at least it will be 3 months less to be overpayed in IYSWIM. HTH

They will take a set amount off from each payment until it's paid back. If you are struggling with the amount they are taking off, you can appeal to have it reduced. I was paying back £30 a week so moaned about it and got it down to about £11 a week.

so we won't have to pay back in one go???? That's ok then - I've already done our sums and know that we can still afford to pay bills and eat on the income we have if we completely take out the TC payment (ie they reduce it so much in order to make the repayments that we get nothing) - oh we don't have any childcare costs - so we don't get for that.

we were overpaid for 2 years running
they wanted to be paid back in one go, I said no, so they divided it into 12 monthly installments . We're still paying some back, but I think this year it's about £6 a month

the whole system is seriously flawed

You will probably be alright this year, depending on how much more you earned this year. The rules have changed this year meaning that unless your income has increased by more than £25000 your tax credits will still be based and finalised on last years income (up to now there has always been a £2500 limit to changes in your income, cause masses of overpayemnts hence the change this year).
However letting them know your income has increased is a good idea, as when you go into the new tax year your tax credits are provisionally based on the income they have carried forward from the previous year, so in your case the low income from 05-06, but to make the payments correct into the 07-08 tax year they should be based on your higher 06-07 income which if you provide now will mean the first payemnts into the tax year will be more acurate meaning the won't change as much when the actual p60 figures are provided.
So in short you should be fine, you picked a good year to change your income, but telling them is a good idea to keep them up to date.