Tax credits

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  • #19721
    Anonymous
    Guest

    I have only just got involved with tax credits so please excuse this question if the answer is simple. If I can give an example:
    A tax credit award letter is dated 02.06.03 and received by the LA two days later; the letter states tax credits are awarded from 10.4.03 and the first actual payment will be made on 10.06.03. What date are tax credits implemented from for HB/CTB purposes?. Thankyou in advance

    #803
    Anonymous
    Guest

    Hi Sunita, there is a distinction here between tax credits and arrears of tax credits. Tax credits are treated as income and are taken into account from the benefit week following the date they are put into payment to the claimant. Arrears of tax credits, however, are paid in a lump sum and are treated as capital and not income. Also, where the arrears are paid as a result of a change in circs, they are disregarded for 52 weeks.

    So, I think I’m right in saying that in your example, the lump sum the clmt received on 10.6.03 would be input as capital from the Monday following that date and the weekly tax credit income also input from the Monday following 10.6.03

    Hope this helps.

    #804
    Anonymous
    Guest

    Hi

    I am a bit confused to say the least, my understanding from section 12 of the HB and CTB A Guide to the new tax credits is that any change in the amount of tax credit or if a new award is made the relevant day of the week is the Sunday of the week of payment ([b:a67f096809]using a Sunday to Saturday calender week[/b:a67f096809])

    Therefore my guess would be for Sunitas example- Tax Credit income should be taken into account from 9 June 03 – that is the Monday 9/6/03 following the Sunday 8/6/03 of the week of payment 10/6/03.

    Anyone please correct me, as this Tax Credit business is starting to make me doubt my own name!!

    Tricia

    #805
    chris harvey
    Participant

    I think Andy is on the right lines but things will be a trifle more complicated. Amendment 7 to the guide gave us lots of complex rules when calculating the amount of credit to be taken into account, but only dealt with awards made at the start of the year for a complete year. We are promised further guidance for claims made after the start of the year and I anticipate this guidance will be very mind boggling and confusing. I have tried to guess what advice me might be given in Sunita’s case but there are so many permutations. Imagine these scenarios – payment is made 4 weekly in arrears and according to the guide the cycle date is 23rd June. The payment made on the 10th June may be up to the previous cycle date of 26th May so the payment is all arrears. The income in this scenario may not be counted until the Monday after 23rd June as this is the date the next payment is actually made. However different rules would apply if the payment made on 10th June covered up to that date in which case most of it would be arrears but some of it may be ordinary (non arrears) credit. The next payment on 23rd June would be for a part amount of 2 weeks to bring the payments in line with the payment cycle. Different rules would apply if the claimant gets WTC paid fortnightly or WTC paid through an employer. The more I think about this, the more I feel a headache coming on! Tricia have a read of the new section 13 that was issued last week, you will definately doubt your own name after trying to absorb that lot!!

    #806
    Anonymous
    Guest

    Hi

    I have seen Amendment 7 and thought the same but I was under the dilusion that section 12 was still relevant to new awards and changes to awards awarded after 6 April 03.

    I am living in a Tax Credit Hell Hole has anyone got an escape route???

    In the last edition of HB Direct a special edition was promised to consolidate advice on Tax Credits has anyone seen it? if you have I would appreciate it if you could let me know where I can get a copy

    Tricia

    #807
    Angela F
    Participant

    I have been reading with interest the questions raised concerning tax credits and the implementation date. I am sorry to put my two pennies in but I was wondering whether the following is right:

    1. New award or change in the amount of award following an income change – Tricia answer would be correct.

    2. Predictable change – taken from the date of next payment dependant on the frequency of that payment.

    My reading of the stuff that has come out would lead me to believe that they are two separate issues. Has anyone else any thoughts as to whether I am right or wrong.

    You will have to excuse me but this is my first attempt at a reply.

    Angela

    #808
    chris harvey
    Participant

    Yes Angela/Tricia I think you are right. Section 13 led me astray and diverted my attention from Section 12. Section 13 is just for awards made at the start either from proformas or awards made before or immediately after 6th April. Section 12 is very simple as it stands now, for in-year changes in the amount of credit or new awards made in-year, the COC takes effect from the Sunday of the week of the payment (using a Sunday to Saturday week). Presume this rule will apply when the change is a ceasing of credits, which in the case of WTC will be when the employer stops paying it. I wait with trepidation for the new update to the guide which no doubt will provide loads of case studies and examples. I still wonder how I’m ever going to get my assessors to understand all of this?
    Tricia the HBDirect Special (Issue 14) came out yesterday. It doesn’t seem to tell us anything we didn’t already know.

    #809
    janish
    Participant

    Has there been amending legislation to allow the use of a Sunday to Saturday week?
    Does anyone agree with Section 1365 of Amendment 7, which is allowing couples without children ( where one has DP/HPP and works 16+) to amalgamate their hours? SI 2402 states that at least one member of such a couple must be working 30+
    Or has there been amending legislationI have missed?
    Any opinions would be helpful

    #810
    Anonymous
    Guest

    Backtracking slightly to Sunitas original question the guidance seems to suggest two different dates of COC. Section 12 says…. ‘when a change in the amount of tax credits occurs or a new award is made the relevant week you should use to decide when the change of circs should take effect is the Sunday of the week of payment’…in this case 080603. BUT Section 3 says ‘tax credits are income and are taken into account from the benefit week following the date they are put into payment to the claimant’…in this case 160803. So the guidance is telling us both the 8th and 16th of June?! or have I read it wrong? :21:

    #811
    chris harvey
    Participant

    I think what they are trying to tell us is this:-
    In HB/CTB the benefit week runs from Monday to Sunday (this has not changed). Changes in tax credits take effect in HB/CTB from the benefit week after the day they occur (with the exception of 7th April 2003 because that day has special rules). However in Tax Credits any changes in the rate of payment are deemed to occur on the Sunday of the week. So if someone has a change to their award or a new award is made, as far as HB/CTB is concerned the payment is deemed to be made on the Sunday at the start of the week.
    Giving an example, if someone is awarded and paid a tax credit on Thursday 14th August (it may be backdated to mid May, that does not matter), then the date the payment is deemed to be made is the Sunday at the start of that week, ie 11th August. Following our usual rules in HB/CTB where a change occurs on a Sunday, we amend the claim from the following Monday, in this case Monday12th August.
    I’m sure when the detailed guidance comes out it will not be as simple as this, but we can always hope.

    #812
    Mark
    Participant

    Janis – your question about the accuracy of the 30hr disregard information in the Tax Credits manual is something I have raised elsewhere on these message boards. Firstly, there are so many other inaccuracies in section 1365 that it is clearly not possible to trust it at all – but I will restrict this answer to the disability issue.

    I asked the Adelphi some time ago whether the word “are” (implying both members of a couple) in the revised Sch3 para 16(2)(b)(iv) meant that disabled couples could aggregate their hours. I never got a usable answer. I then decided (just because I needed to make up my mind) that the word “are” (as opposed to the word “is” (implying one or the other of the couple) in Sch3 para16(2)(b)(i) had no significance. I decided this because the disability paragraph doesn’t contain the same explicit reference to aggregated hours as in Sch3 para 16(2)(b)(ii)(bb).

    Right now – I have changed my mind and decided that disabled couples can aggregate their hours to reach 30 and get the disregard. I say this because if this weren’t true there would be no need for the words “or both members are” to be included in Sch3 para 16(2)(b)(iv). However – I reserve the right to change my mind again!

    Either way – the revised Sch3 para 16 is very badly drafted and clearly needs to be amended.

    #813
    janish
    Participant

    Thanks Mark
    I agree with you ( at the moment! )

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