arrears of tax credits

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    Can anyone help?

    When looking at a tax credit letter which for example states:-

    1St payment of £456 will be made on 22.05.03. A further payment of £80 will also be paid.

    Your payments will then change to £81 from 29.05.03.

    Should the £80 be included as arrears when calculating the weekly entitlement. It would appear that when using the quick calculator that it does. However we have a difference of opinion in the LA Benefits Section, and in order for me to check their work I need to be sure. ❓


    The payment of £80 is the first regular instalment of the award. Therefore the arrears figure would be £456.

    I have contacted the IR on numerous occassions with examples like this and finally spoke to someone who seemed to know exactly what info I wanted. She informed me that with weekly payers when a payment of arrears is made, the first normal weekly instalment is normally paid in the same week that the arrears are paid.

    Hope this helps.


    Thanks for your reply. (Have been off or i would have replied sooner)

    I was calculating tax credits this way until i tried using the quick calculator. It disregarded the first payment, or calculated its own arrears amount! Very confusing!


    Quick note on QuickCalc tool:

    Susan – firstly yes it is all very confusing.

    Hopefully this will clear up what the quickcalc tool is doing.

    The quickcalc tool has two options for arrears: “manual” and “automatic”.

    The “automatic arrears” are calculated by counting the days from the start of the award up to the date of the award letter. This is then multiplied by the daily rate of TC.

    The figure this produces is very straightforward. Any TCs due before the date of the award letter are treated as arrears.

    The other option for calculating arrears is by “manually” entering figures from the award notice. (i.e. stated arrears and “first payment” arrears)

    However, when the “manually” entered figures leave a shortfall (in the case you quoted £80) when compared to the “automatic” arrears, you have to ask yourself why?

    If the TCs payable before the award letter date are not being disregarded and treated as capital – why?

    Personally I would use the automatic figure the quickcalc tool supplied.

    The Inland Revenue will always take great delight in finding new ways to itemise awards.

    However, I would say “Don’t get distracted”. As a minimum, you should always disregard payments for the period before the award letter date.

    Hope this helps

    Pete (the guy wot wrote the QuickCalcs)


    Thanks for explaining that Pete, I even understand it. Though don’t test me on it!


    We use the manual arrears option in cases where the tax credit award has changed. This is because the annual award is then made up of two or more daily rates so using Auto Arrears doesn’t work.
    No doubt you will let me know ,Pete, if there is another option?


    Hi Janis – yes, when there is a (non-predicted) change in the rate of the award the automatic arrears no longer provide a meaningful figure.

    That’s because they are based on a whole year at a given rate. Where there has been an unforseen change in the award, perhaps leading to a reduction to avoid overpayment, then manual arrears are the only way. In this specific type of case the ideal calc to use is the “Auto-arrears skipped” version. This gives priority to any manually entered arrears.

    In the case of “Predicted Changes” – i.e. child reaches age 1 or 16 or 19 during year, then the “split award” quickcalc includes provision for this and WILL produce meaningful auto arrears.

    (What are we talking about?: Quickcalc tools – [url=]website here[/url])

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