Tax credits and starting work

[Mrsemcgregor]

I’ve just got a job after years of looking! I start on Monday.

Up until now we’ve qualified for the child element of tax credits, about £340 per month based on my DH full time salary. I know we won’t be entitled to tax credits anymore and I am honestly over the moon about it, I hated claiming and always felt like I was doing something wrong.

I was wondering if I will have to pay back what I’ve already been given this year? They have been paying me that money based on just my DH earnings for the year, but now it turns out we wouldn’t qualify, even with me just earning from Nov-April. This is obviously a concern for me because we won’t have around £2k available to pay them back.

You will need to call them and give them an estimate of what you might earn between starting the job and the end of the tax year. They will recalculate based on information you've given. If yu need to pay some back it can be taken gradually.

Thank you, I will call them as soon as I have signed my contract and will know my first pay day. I have a feeling I might have to pay back everything I’ve had so far this year.

I know it’s only right that I need to give it back if getting work means I no longer qualify for this tax year but man is it a kick in the teeth for getting into work and off benefits! Essentially it’s put me in debt.

You just tell them as soon as you have a new income
Coming. They will pay you any remainder you are due up until your first pay day, then they sill reduce or stop your payments based on what you are entitled to on your new wage. (Depending on your hours will depend if you still qualify for payments or not- you may get working tax credit top ups instead)

As long as you tell them as soon as you start, they won’t continue to pay you and therefore you will have nothing to pay back .

@Runforyourlifeitsagherkin this is where I am confused, aren’t my monthly payments based on annual income for tax year 2020-21? So if for example I declared our income would be £25,000 but I fact we end up earning £35,000 (over the threshold for any benefit) for 2020-21 because I started earning half way through the year wouldn’t I need to pay back all the money because we no longer qualify for any tax credits for the 2020-21 tax year?

Sorry I’m not very good at explaining!

[quote Mrsemcgregor]@Runforyourlifeitsagherkin this is where I am confused, aren’t my monthly payments based on annual income for tax year 2020-21? So if for example I declared our income would be £25,000 but I fact we end up earning £35,000 (over the threshold for any benefit) for 2020-21 because I started earning half way through the year wouldn’t I need to pay back all the money because we no longer qualify for any tax credits for the 2020-21 tax year?

Sorry I’m not very good at explaining![/quote]
Yes correct. Tax credit entitlement is calculated over the tax year so if you have exceeded the threshold you will need to pay it back. Better to report the change in income now than have to pay it all back at the end of the tax year. If reported now you may not have much to pay back.

Thank you @Babyroobs that’s what I thought. I hope they allow low instalments because I’m not sure where the money will come from! We are only about £300 a month better off with me working 30hrs a week than we were with me not working and claiming TC. If they want me to give back a big chunk a month on top I have a feeling we will be worse off once travel expenses are taken into account! Bloody nightmare!

@Mrsemcgregor

Thank you *@Babyroobs* that’s what I thought. I hope they allow low instalments because I’m not sure where the money will come from! We are only about £300 a month better off with me working 30hrs a week than we were with me not working and claiming TC. If they want me to give back a big chunk a month on top I have a feeling we will be worse off once travel expenses are taken into account! Bloody nightmare!

This happened to us many many years ago. We earned too much to claim tax credits any longer and they sent us a bill for immediate payment of nearly £1000. I rang them up and they were fine and we paid it back at £30 a month over 3 years.