Tax Credit Bills

What does one do when you get an unexpectedly large bill as a result of higher earnings?

I am, of course, referring to bills for overpaid Tax Credits, which are issued this time of year.

First you need to check the calculation, Easier said than done. This would have been sent to you in August. But beyond checking the income figures, it is anyone's guess how this translates into tax credits that are payable to you.  Often there will be a withheld amount, in case Revenue & Customs end up over paying you.

You can write in and appeal against the calculation. If R&C have got something wrong, whether on the income or circumstances side, point this out to them.

If your income and circumstances will be similar for 2014/15, then you can ask for the bill to be offset against next year's tax credits claim.

And finally if all else fails, you can do what George Osborne did and agree to pay it in instalments (two is acceptable, more than that may not be).

With tax credit rates being frozen for 2015/16, expect another bill to arise next year as well.

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Tax Credits Renewal

TAX CREDITS RENEWAL

Now is the time of year when Tax Credits have to be renewed. The deadline is 31 July

This year HM Revenue & Customs will know some key information about employees from their RTI Online Filing Payroll system: -

EARNINGS

They know what figures are on your P60. Some forms may even have the amounts filled in, though I haven't seen any with that on yet

But that is nothing compared to the next important piece of information

HOURS WORKED

They will know on average how many hours you worked during the year, because your employer has to tell them this every time an employee starts work.

This is a really important piece of information, because your tax credits are affected if you work less than 30 hours a week.

Self Employed claimants are not affected by the above, but they will check your figures against your tax return that you filed online.

If you haven't worked out your profits yet, don't panic! You can enter provisional amounts and report the final amounts when you file your tax return

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