TAX CREDIT INSTALLMENT_ A ONE OFF PAYMENT OR NOT

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  • #19924
    Anonymous
    Guest

    I would be grateful for advise on the following case.
    payments in 2005/2006
    the award letter says
    “payment from employer”
    from 06/04/2005 xxx will pay £8.27 a day
    [color=red:5346b96016]in addittion [/color:5346b96016]to the WTC included in your pay by your employer we will pay
    on 08/04/2005 £2.24
    in addition to the WTC INCLUDED IN YOUR PAY BY YOUR EMPLOYER WE WILL PAY – YOUR PAYMENTS WILL THEN CHANGE TO £1.96 EVERY WEEK UNTIL FURTHER NOTICE.

    so it seems that emloyer is paying £8.27 per day but in addittion inland revenue is also paying one installment of £2.24 and remaining installments at £1.96 on a weekly basis.
    thank you
    would you treat the installment of £2.24 as a one off and work out the period the £1.96 is for?
    or do you think the £2.24 should also be used for a week and then the rates are changed after that?

    #1545
    junderwo
    Participant

    I would use the £2.24 as an instalment for 1 week – it is not a one-off payment but is part of a series of payments.

    #1546
    Anonymous
    Guest

    thinking… (edited out my original answer)

    #1547
    janish
    Participant

    I would use £10.23 and forget about the £2.24

    #1548
    Anonymous
    Guest

    I’m working on a theory (it’s only a theory at the moment) that where:

    – the “odd” amount exceeds the regular instalment, and
    – the difference between the “odd” amount and the regular instalment is less than (N x 1p), and
    – N is the number of instalments left to go if there are no further changes

    then the odd amount is a regular instalment plus an adjustment that it would be impossible to pay any other way, and it should probably be taken into account as regular income.

    In this case, the difference is 28p; there are, what, 50 instalments to go. Now you cannot pay 28p spread over 50 weeks because the weekly amount would be less than 1p, so this indivisible residue has to be paid up front with the first instalment. But I think the payment is part of the regular series rather than a one-off.

    That’s my tentative theory.

    What puzzles me about this one is: why on earth is it necessary for the IR (or HMCR or whatever they call themselves now) to pay a small amount of the claimant’s WTC entitlement directly? Why can’t the employer pay all of it? It cannot be the child care element, because child care is only tapered after all your regular WTC has gone. But whatever arcane reasons they have for splitting it this way, I think regular instalment is the right option.

    #1549
    Anonymous
    Guest

    I’m with Peter on this one.

    The rounding up theory is pretty watertight.

    Therefore if you are planning on counting the weekly 1.96 then the 2.24 should count the same.

    Also baffled by IR paying at same time as employer. But seems like a regular income so should be counted. The guidance about simultaneous payments in Para 16 of Circ G3 only covers a small one-off payment – not regular income.

    Obviously a product of the Quirky Awards and Bizarre Payments team recently set up in Falkirk.

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