Terms & Conditions

[LindaL]

One of our claimants has shown us a letter she has received from the Inland Revenue. It states that although the CTC award is due for renewal, payments will not stop until the new award is made. The letter states she will receive her new forms to claim between April and July 04. At the moment all our claims have an end date of 5 April 2004 for CTC and WTC. What are other authorities going to do with their awards, especially with end of year billing in mind?

[Anonymous]

This is going to happen every year to all claimants as I understand it.

Tax Credit payments from this coming year onwards are assessed on income for the last complete tax year. People cannot confirm how much that was until they receive their P60 in April, or compile their self-employed accounts or do whatever they have to do to pull together figures for income from other sources. So it’s going to take a month or two for the Inland Revenue to start calculating 04/05 Tax Credit. In the meantime, they don’t weant to leave people without what is in many cases the largest single income stream. So they make temporary payments calculated as follows:

– the same income they used for the 03/04 award (i.e. 01/02 tax year or changed amount that the claimant has reported in-year)
– the same family and employment details
– 04/05 uprated elements and thresholds

The only change from the rate currently in payment should be a slight increase for the uprated elements. LAs can disregard this under the 30-week rule (Reg 26). So you leave your tax credit income unchanged for HB purposes. By the end of 30 weeks, the IR [b:436341fad2]should[/b:436341fad2] have completed its 04/05 assessment, but I’m not betting on it.

Something else that the country needs to prepare for is the fact that the IR will use the claimant’s confirmed 03/04 income for a second purpose: it will be used to reconcile and balance up the claimant’s 03/04 tax credit entitlement. Current in-year tax credit instalments are never anything more than a temporary assessment, to be confirmed or adjusted after the end of the year when the claimant’s income for the year is known. Just like tax itself, in fact. I reckon that [b:436341fad2]everybody[/b:436341fad2] who received more than the basic family element of Child Tax Credit during the year that is about to end has been overpaid or underpaid. Next year’s award will be adjusted accordingly. I cannot wait to see the entitlement letters and what should by then be about Issue 12 of the DWP guidance, some time round June or July.

[simon]

Peter I’m no expert on this so if the answer is obvious sorry but when the Tax Credits are “corrected” how would any overpayments/underpayments be classified.

[simon]

Sorry just re-read your post and think I know the answer, i.e. for hb/ctb purposes we would only take the adjusted amount into account even though this would be lower/higher than the actual entitlement. I think

[Anonymous]

That’s the way I see it too Simon. Having said that, there was a thread on here last year in which the concept of “arrears” paid as part of the claimant’s ongoing Tax Credit instalments came up:

[url]http://hbinfo.org/forum/viewtopic.php?t=507[/url]

I’m not totally convinced by what the DWP officials quoted in the thread had to say about that. It seems to me there is a purely academic distinction between higher instalments counted as income on the one hand, and regular instalments supplemented by a regular arrears instalment on the other. Depends what is meant by “payment of arrears” in the Regs, I suppose.

One thing is certain: a lot of people are going to be receiving higher instalments throughout 2004/05 as a result of their having been underpaid in 2003/04. Bring on the guidance!

[Anonymous]

Just to let you know that TC claimants will be given a deadline of 30/09/04 to confirm the previous years details re: income, family details, etc – therefore, the reassessment of their TC awards for 2004/05 may not take place until well into October at earliest.

[pdurkin]

On the subject of the TC renewal, IR have stated that, for cases where they have been recovering an overpayment during the current year from ongoing payments of TC, the deductions will cease at the start of April (I suppose the o/pay will have been recovered in full) and these customers interim payments (pending renewal) will be made based on the “full” award rate for this year. However they will not be issuing any revised award notice advising the customer of this. Assuming that we have amended the amount of TC we have used in the HB assessment for the current year to reflect the net TC award has anyone any thoughts on how to pick up the new interim payment rate from April? Even though the customer has a duty to advise us of any change, he won’t have received an award notice to prompt him of the need to tell us.

[simondoyle]

We’ve been discussing this on http://hbinfo.org/forum/viewtopic.php?t=1096

[Author]

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