How do tax credits work? Getting it all straight in my head and am severely confused!

[Alambil]

I am going to qualify in a couple of years as a teacher and am just wondering what my income will be like (just so I can cope being on benefits for these months - a light at the end of the tunnel and all that).... anyway...

I just went on the IR site and it calculated about £500ish in CTC and £60ish childcare help. No WTC though (my salary will be around £20 133 to begin with). It also said on there that this is an estimate blah blah.

I have heard a LOT of stories about how they give you so much money and then want it all back etc so I'm left wondering; is that £500 over the year or per month or what and also; should I spend it?! I know that sounds silly but I couldn't afford for them to give me it, me spend it and then them want it all back! Is it stupid to just save it all up and wait for the "we screwed up - give us it back" letter (which would be JUST my luck if the benefits screw ups that I've survived are anything to go by!)

Sorry for rambling; hope my questions aren't too badly worded!

A lot of ht eproblems regarding giving it back have been resolved by new tolerances - so I think you can rest (reasonably) assured about that. I can explain in more detail ehy this is if you want, give me a shout.

I think they normally quote you allowance per year, which is paid 4 weekly, although I may be wrong. On £20K per year (+a partners income?) I don't think £500/month sounds right.

I was overpaid originally. It's been a nightmare since.

You should be okay now though -they've tightened things up.

If you DO get an overpayment, FGS dont trust them to know the facts and stick it in a savings account or something and DONT spend it. You should be fine then.

Am not an expert but from my experience claiming WTC, mistakes aside, the main problem is that you qualify based on your current salary and the payslips etc you provide for the previous year, but if you earn more over the year (ie if you get a payrise or an unexpected windfall) you may go up a band and not be entitled to as much.

As long as you keep them up to date with your earnings you shouldn't have to give anything back.

Basically, they assume you will earn the same as last year, they pay you based on that and then get the numbers to tally at the end of the year.

Old system: If you earn less than £1000 (for the sake of argument) more than last year they ignore it. If you earnt more than £1000 more than last year they sting for overpayment.

New system: If you earn less than £25K more than last year the extra is ignored. If for some bizaare reason you earn more than £25K more than last year (basically you forget to tell them you got a job!) they sting you for overpayment.

That is the reason that for 99% of the population overpayments should be a thing of the past .

Single parent going from benefits for 5 yrs to working.

I don't have a clue how it all works - seems almost easier to NOT apply and just live within my means on my salary!

I doubt if it'll be £500 a month. I don't get that and my earnings are much less than 20k at the moment (I will be getting a fairly substantial payrise when I go perm with my employer so will lose a huge chunk of my tax credits and will pay more tax - you win some, you lose some!). I think the £500 will be divided by 12 . Things may have changed in a few years time anyway.

Have you tried the www.entitledto.co.uk site? and compare answers. It may be clearer whether it is monthly/yearly on there.

I guess as a single parent there is a chance that it could be monthly...

You get paid monthly straight into your bank. I was getting more WTC the more I earned? But now I have not worked for 9 months and get almost nothing.
I have stopped trying to work it out because it is a huge Gordon Brown f*k up. To join with the other Labour party f*k ups!

I was puzzled by that as well Ronshar - once you get one benefit it tends to snowball and you get eligible for a lot more. My tax credits are paid weekly as my Child Benefit was left on weekly payments. Since I get paid weekly (temp worker) this suited my budgeting.

Thank you I did wonder after I posted if I was just being negative and disrupting the thread!
It just seems so complicated and when you try to ask the peolpe on the phone they just say "we can send you the calculations" Thats no good as I have no idea what they are calculating.

I don't understand them anyway .

I wish they'd say (for example) we'll pay you 5% of your salary below a certain amount, 3% below this amount and none above this amount. Maybe it does and I'm a bit dim and missed it.

it's more complicated than that though - it does depend on your salary but you get a certain amount for having a child, another amount for having a child under 12 months, another amount for having 2 children, and if you pay for childcare that can affect it too.

What I don't understand is when I get my form it says "You are entitled to £..." some fabulous amount like 8k and then it says "and you lose £... because of your earnings" which is invariably some other fabulous amount almost exactly equal to the first amount, thus leaving me with something not terribly exciting per year.

It's like saying "here is my Christmas present to you, which is a Louis Vuitton Handbag but I am deducting your Christmas present to me, which is a new I-pod so the difference is this book token for £1.50"

I did find teh full formula online once.

I am a scientist.
I am a mathmetician.
I even do a bit of stats.

BUT the forula made my mind boggle

Tax credits are incomprehensible.

And they piss me right off as they are so useless - our DD2 is disabled and receives DLA so theoretically we get the Severe Disablement Allowwance of £xxxx.

But then the letter says "due to your income this is reduced to NIL"!

It's not like my husbands wage reads like a telephone number, he's in the military so yes it's an OK wage but not fabulous. But apparently earning a crust for your family means that your child isn't disabled after all

Sorry to go off on a tangent. Basically don't depend on them, look at it as extra.

Its all a load of rubbish. Would be great if they could decide on how much you are entitled to but they can't.

I kid you not when I say I phoned them three times in one day, gave them the same figures to work with, the exact same circumstances. One advisor told me I was entitled to one amount, another told me a totally different amount, the other could tell me at all at that particular time

sidge - that is really crap - can't believe they do that with disability allowances, thats pretty disgusting IMO.