Tax credits help please, very stressed

[harryangel]

There seems to be so many posts on tax credits here but it such a minefield!

Our situation is this-
I'm currently on maternity leave with our first child (he's 8 months now). We began claiming tax credits in February this year to keep us afloat and survive on my SMP. I worked in a nursery so don't earn much and my partner is a self-employed musician and earns next to nothing.
However last September (2017, before we were claiming tax credits) my partner's mum bought us a house- she transferred about £300,000 from a trust fund to him in order to purchase this and he now has to declare this as income in his tax return.

Which of course yes it's amazing to own our own house outright but we still live on our old income, and now surely I'm going to have to tell the tax credits people about this on our renewal form- meaning we'll no longer be eligible??
Will they ask for our payments from February- now back?? Or were those payments based purely on 2016/17 earnings?

Also worrying about how I'm going to manage working full time + paying for childcare on my income :( Any advice very helpful.

The way I understand it is that he will declare that as his income for the tax year he received it, then give tax credits your estimatated income for the current tax year, as a change of circumstances. You’ll need to remove £100 per week that you receive statutory maternity pay from your income and remove anything you pay into a private pension too.

Probably best to call them and ask though.

Can you take out a small mortgage on the house to releases some equity and tide you over? You’ve got a great asset there!

Has he sought advise from an accountant/financial advisor? Is the 300k definitely considered income, not capital gains or something? Most definitely worth a couple of hundred to get quality financial advise. Separately to that, tax credits are estimated based on previous year's income but can be adjusted if there's going to be a significant difference. If the money was given in 2017/2018 tax year and does count as income, you would have to pay Feb-April back but this year is based on this year's income.

And yes to taking £100pw off smp when calculating income, its there in the small print but they don't make it obvious and if they get info direct from employer you have to ring tax credit line and adjust it.

Are you sure this £300,000 counts as income? If it does then your dh is liable for over £100,000 in income tax. I do not think this is the case. I am not an expert but please seek proper advice from an actual expert not a website.

Eatsleepworkrepeat- are you saying I may have to pay back Feb-present money but may still be eligible for TC based on our current income?

Imchlibob- financial advisor said that "top slicing" may apply meaning that he should only have to pay a smaller amount of tax, something like £11K.

Carrotcake- wouldn't be able to afford mortgage + bills + childcare on solely my income. :(

If you are that hard up, could you downsize and release some capital to live on?

I didn’t think that savings affected tax credits. Just the interest earned on them as that is classed as income.

I may be over simplifying things. We just borrowed £20k - a remortgage- and are holding it in a savings account whilst we use it for home improvements- and I checked with tax credits and they said it doesn’t affect anything.

Not sure if the amount you have makes things different. I’m not sure!

I dont think it will be classed as income, however you really need to ring them and ask. If they confirm its not classed as income I would ask them to confirm it in writing. However we have an average income and savings of about £10,000 between me, DH and the kids (who actually have most of the money!) and its only interest they want us to declare.

Your financial advisor thinks it counts as income? This is beyond odd! Is this to do with potential tax planning for his mum's estate? Or was the money in trust for him all along and it's capital gains?

OP, your post has been really bothering me. Why doesn’t your DP just get another job? It would be lovely to be a musician but if he earns nothing and you are relying on the tax payer to supplement your income, is this fair? Can he train as a teacher? Get him earning a real wage if you are pregnant, you have enough to worry about with the baby.

I don't think a gift would be counted as income . However you are in good position. If I understand correctly you are in a 300k house with no mortgage or rent to pay , bills which normally take up a large chunk of anyone's income. One of you needs to be bringing in a decent wage rather than worrying about living off benefits.

Could you go back to work now and your OH looks after your baby during the day and do his music, or something else, in the evenings?

I think your DH needs to get a better job

Your DP needs a job, not a hobby. Otherwise can be a SAHD so you won't have to pay out childcare costs?

I think it's a bit mad if someone can own a 300000 house mortgage free and then still claim benefits.

Does your DH have no pride or sense of responsibility?

He's happy to play at musician and take handouts and let his chid be raised on benefits rather than get an actual job? What on earth do you see in him?

boxsets there would be no boxsets for you to watch if people didn't make the kind of life choices OPs partner does...