Tax Credits

Working Tax Credits

The UK government under some circumstances will make an allowance for people with low income called tax credits. There are different types of credits. If there is a responsibility to a child that in the house a child tax credit may be given. If a person works but the wages are to low for the working party to be self supporting that person qualifies for a working tax credit. This means you do not have to have children to be eligible for payment.

How much you can expect in the way of tax credits depends on several factors such as the number of children living with you. If you work the number of hours spent working is taken into consideration or if any of the children have a disability. If you are fifty years or more it makes a difference. Your income makes quite a difference in the amount of payment you receive. People in the lowest income bracket receive the most payment.

If you are living alone you can make a single claim and this is made only if there is no partner. If you are either married or living with a partner a joint claim is necessary for tax credits. The credits are paid into a bank, Post Office, National Savings Account or a direct payment could be made. They are paid either weekly or monthly. If two married or two partners are working and both are qualified for credits it must be a decision between the two people which will receive the payments. If a couple are claiming child tax credits; who gets the money depends on which one is the child's main caretaker and again this issue must be decided between the two parties.

The credits people receive are based on the circumstances people live under along with the income. The claims run from the date the claim is filed to the end of the tax year. Each year a notice is given pertaining to the information that has been filed and in the notice you will be asked to confirm the information on hand and to renew the claim. In this way the government can check out the current payments and schedule the payments for the upcoming year. If there has been an underpayment or an overpayment adjustments can be made. If payments are still being received after the tax year ends without a new claim being made the payments will have to be paid back. If circumstances change it must be reported to the office of tax credit immediately. If a person's income takes a downswing this should be reported so more payment can be given. Also you absolutely must report it if your income goes up; it may not make any difference in the rate of current payments received but in the following year adjustments will be made.

If your income changes in the current tax year then the amount of payment will change. If your income is less than the previous year you can expect to get more tax credits. If your income is higher you will receive less. The change will not be in effect until the following year. There is a specified amount set where you are no longer in a very low income bracket and if your earnings go up beyond that amount and you do not report it get set to pay back, but this will not be necessary if the increase is reported immediately. A decrease in the amount of payments given to you is backdated to the time the income changed. Plain and simple report an increase in income and you will not have to pay back anything, fail to do this and you will be charged for it.

If you are filing for a tax credit and your partner leaves or you get another one your claim ends and you have to apply for a new claim. Again report the change immediately, the change should be reported in a month's time. If this is either not reported at all or not reported within a month and the tax office has paid you overpayments you are not only going to have to pay it all back but there will be an additional penalty. When the tax office is called they will stop your payments because your circumstances are no longer the same. The will ask you questions to see if you still qualify for a claim. This is the time to put in a new claim. If your partner has left with no intention of coming back you must put in a new claim as a single person. At this time you can make the claim over the phone. If you already have a new partner, both of you have to make out another joint claim. When the form has been filled out and received the tax office will send you a reward notice. This will tell you what tax credits you now have coming. Check the information over carefully, they make mistakes to. If you no longer qualify the claim ends at the time you and your ex-partner split up.

To better understand your tax credit award notice there is an explanation telling how much you are entitled to based on the information given. Check this out because you have one month to correct it. The award notice is divided into three parts. Section one tells about the information you gave them. Section two tells how the tax credits were worked out. The third and last section tells you what you are entitled to. It explains how many tax credits you are going to get and the type, plus how the payments were worked out. They tell you about any changes that you have to notify the office about, when to tell them and how you are going to be paid. There is a check list to go over to make sure your information is correct. Put your award notice away in a safe place where you will not likely to forget where you put it.



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"A good plain English summary of Tax Credits. "

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