Do I bother with tax credits?

[Smiler82]

I REALLY don't understand this whole childcare/working tax credit malarkey!

I did a calculator online, which only asks about last year's earnings. Because DH was made redundant and I was on maternity leave, based on those figures we do qualify for some tax credits.

However, DH is in a new job and I am now working 1 day a week, so based on the new figures I don't think we do qualify for any help. But if they pay out based on last year's earnings, should I apply anyway? Or will we just have to pay it all back next year?

 

[BellaBoo0512]

As far as I'm aware tax credits go off last years earnings. If your entitled to something then id claim. Then if your earnings are higher than the thresh hold this year then you won't be able to claim next year if that makes sense x

 

[CourtneyLane]

I thought they paid out based on last years earnings but only in the sense of using last years earnings as a guide of this years income. So at the end of the year when they see that actually you earned loads more this year, they decide you've been overpaid and want it all back. I think if your income is considerably higher or lower than a previous year, they do it off an estimate for what you expect to earn in the current year instead.

Edit: but you'd have to speak to them to inform them of the changes so they can do it based off an estimate otherwise they'll just leave you to it and shock you with the letter next April.

 

[Smiler82]

Thanks for the replies I was hoping to avoid a) ringing them and b) filling in a form, but I gave them a call and they are sending me a form

Looking at the website I thought we were not entitled to any help with our new income but I gave last year's details to the woman on the phone, and then told her our projected income for this year (I'm self employed) and she reckoned we could still claim about £18 per week for childcare. Better than a kick in the teeth I suppose! Just don't want to end up having to pay them back, it's such a faff. I really hate having to do tax-type stuff, sends my brain into a spin!

 

[BlueWater]

*Following.
I'm in the same situation. Earned less last year than I will this year.
I wouldn't fancy paying that overpayment back.
I've applied for tax credits regardless

 

[Smiler82]

I still haven't filled in the form been sitting on the table for weeks....

 

[BlueWater]

I still haven't filled in the form been sitting on the table for weeks....

received mine today. And I've already filled it. Now just need to stick a stamp on it. But taking it to the post box is the hard part!

 

[Smiler82]

OMG I am so doing mine tomorrow!!!

 

[BlueWater]

Yeah apply now!
I've just read a HMRC booklet online, it says if your income is higher this year than last year: they'll ingnore the first £5000 increase, then work out how much you're entitled to.

But you have to tell them of the increase; saves HMRC overpaying then having to pay them back. Here's the link to explain it.... https://www.google.co.uk/url?sa=t&s...cQFjAA&usg=AFQjCNGgmGtTik_21L87rDwXwUlAwBmbgg

 

[Smiler82]

Thanks! It isn't just me is it, it genuinely is quite convoluted and confusing?! ( And er no, still haven't managed to do the form! Tomorrow...!)

 

[Abz1982]

NEVER trust their estimates on the letter! We applied as we get childcare......and they giv eyou an estimate based on your income staying the same or in teh same rough area.....well, I gave them our earnings, which were LESS than the year before and they saif the amount would be £200 LESS! Then they sent another letter saying it was £30 more.........I have to call them to tell them I am working again. We NEED them for child care, its not like we can bank the money, but I KNOW that if this job lasts longer than 3 months then we will be over the limit, and I fear an overpayment, but last year we did struggle.

This is where it is fundamentally wrong..they allowe calculations based on the current year as well, or they take both into consideration so it can be very unfair.

 

[BlueWater]

That link I've uploaded helps to explain. You still have to tell HMRC of any change. They say they ignore the first £5000 of any increase, and £2500 of any decrease