Tax Credits
It’s that time of year again. Anyone in the Tax Credits system will shortly be receiving their renewal pack. The renewal form has to be completed and returned to the Tax Credits Office by 31 July. Failure to comply will result in the claimant being immediately withdrawn from the system and future credits will be stopped.
Self employed people in particular may not know what their 2012-13 profits are by 31 July as accounts may not have been completed. In such cases they will have to use an estimate. This can be dangerous. If a claimant under estimates the income it can result in Tax Credits being unnecessarily clawed back so care should be taken and advice sought if possible. Where estimates have been given, the actual income figures have to be provided by 31 January 2014.
Claimants also need to check the accuracy of the information shown in their renewal pack and ensure that the Tax Credits Office is informed of any changes such as changes in working hours, childcare costs or children ceasing full-time education.
For 2012-13 and depending on whether income has been estimated, the income disregard is set at £10,000. This means that your actual income can be up to £10,000 more than the income level on which the Tax Credits were paid without any claw backs of Credits already paid in that year. This income disregard figure has reduced to just £5,000 from 6 April 2013 which will make the Tax Credits system much tighter next year.
Should you require any help or further information please contact Barbara Power at Green & Co.
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Business Tax News