tax credit 2012-the changes

8/3/2019 Tax Credit 2012-the changes

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Tax Credit 2012presented by


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Tax Credit Link

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john Fairest inassociation with cjss,org

and [email protected]


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Tax Credit from April 2012

Tax credit change could cost families 4k

a year - Labour About 212,000 families couldbe hit fromAprilwhen the threshold is raised to 24 hours perweek, the official data highlightedbyLabour

shows. On this presentationyou will see Tax Credit

examples

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Child Tax Credit Change

Child Tax Credit payments depend onyour circumstances andincome.

At the moment,you can usuallyget some Child Tax Credit, aslong asyour income is not over the limit of 41,300. From 6April 2012, this limit will be lower for most people.

From 6April 2012, the income limit foryou will depend onyour own situation. But as a veryrough guide, you might notbe able to get Child Tax Credit from 6 April 2012 if:

you have one child, andyour annual income is more thanaround 26,000 you have two children, andyour annual income is more than

around 32,200

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Couples with children - new working hoursrules for Working Tax Credit

At the moment, ifyou're responsible for at least one child andworking at least 16 hours a week,you can get Working Tax Credit.

From 6April 2012, the rules for couples with at least one child arechanging. In most cases, to qualifyfor Working Tax Credityour

joint working hours will need tobe at least 24 a week.This will mean: ifyouboth workyour joint weeklyhours mustbe at least 24, with

one ofyou working at least 16 hours a week

if onlyone ofyou works, that person mustbe working at least 24hours a week

If neither of these apply,your Working Tax Credit will stop from 6April 2012. But there are some exceptions to the new rules -

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Our income goes down - change in how itaffects your payments part 1 Ifyour annual income for the current tax year is lower than

lastyear, you mayget extra tax credits for the currentyear.Ataxyear runs from 6April oneyear to 5April the next.

The loweryour income, the more tax creditsyou can get.But from 6April 2012, whenyour income goes down itmight not affectyour payments until the following year.

You should always tell the Tax Credit Officeyour new lowerincome, to help make sureyou get whatyoure entitled to.

If your income goes down in the current tax year by

2,500 or less Your payments wont change for the current taxyear - if allyour other circumstances staythe same. But the Tax CreditOffice will useyour new income figure to work out what topayyou for the following taxyear.

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Your income comes down p2

If your income goes down in the current

tax year by more than 2,500 The Tax Credit Office will re-workyour taxcredits. But theywill ignore the first 2,500 ofthe reduction. Theywill take the full amount of

the reduction into account when theywork outwhat to payyou for the following taxyear

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Couples: example showing how the new working hours

rule can affect payments

You're married and have a child. You work 16 hours a week andyour partner doesn't work.You have ayearlyjoint income of 13,000.

Payments up to 5 April 2012 In this exampleyou'll get Child Tax Credit, and a reduced amount of Working Tax Credit.

Your payments over theyear wouldbe 4,278 - roughly81 a week.New payments from 6 April 2012 Your partner isnt working, andyou dont meet anyof the exceptions - such asbeing aged

60 or over, or disabled. Soyou wont qualifyfor Working Tax Credit from 6April 2012. Inyour situation, althoughyou work 16 hours a week,your joint working hours will need tobeat least 24 a week to qualify.You will onlyqualifyfor Child Tax Credit.

The most tax creditsyou could get from 6April 2012 wouldbe a total of 3,235, made up ofthe:

basic familyelement of Child Tax Credit - 545 child element of Child Tax Credit - 2,690 With a joint income of 13,000,you'll qualifyfor the full amount of 3,235 - roughly62 a

week. This is roughly19 a week less, compared to whatyou were gettingbefore.

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You're single, working at least 30 hours a week,and have always had a yearly income of 12,000.Payments up to 5 April 2012 You are currentlygetting tax credits of 424 for the year - roughly

8 a week.New payments from 6 April 2012 From May2012,you estimate thatyour income for theyear will go

down to 10,000 - a reduction of 2,000. Because this reduction is less than 2,500, it wont affectyour tax

creditspayments until the followingyear. This means the amount of income taken into account when working

outyour newpayments from 6April 2012 willbe 12,000, not10,000.

Your tax credits payments over theyear will roughlybe the same. Your new income of 10,000 willbe taken into account whenyourpayments are worked out for the next year, starting on 6April 2013.

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You're in a couple, one of you works at least 30hours a week and you have no children. You have

always had a joint yearly income of 17,000.Payments up to 5 April 2012 You are currentlygetting tax credits of 325 for theyear - roughly

6 a week.New payments from 6 April 2012 From May2012,you estimate thatyour income for theyear will go

down to 13,000 - a reduction of 4,000. Because this reduction is more than 2,500, the Tax CreditOffice

will look atyour lower income when working outyour payments.But theywill ignore the first 2,500 of the reduction.

This means the income taken into account for your newpaymentsfrom 6April 2012 willbe 15,500 instead of 13,000.

Your tax credits payments for theyear will increase to 945 -roughly18 a week.

Your new income of 13,000 willbe taken into account whenyourpayments are worked out for the next year, starting on 6April 2013.

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You're single, aged 51 and working 30 hours a week. You've

been working these hours for the last two months afterbeing on Jobseeker's Allowance for six months. Your

annual income is 10,000.

You're single, aged 51 and working 30 hours a week.You'vebeen working these hours for the lasttwo months after being on Jobseeker's Allowance for six months. Your annual income is 10,000.

Payments up to 5 April 2012 You are currentlygetting Working Tax Credit of 3,275 for theyear - roughly62 a week. This

includes the extra amount called the '50-plus element'. New payments from 6 April 2012 The '50-plus' element wont be paid from 6April 2012. Ifyour circumstances staythe same,your

tax credits will reduce to 1,247 - roughly23 a week. If you're working under 30 hours a week

In the same example, ifyou were working less than 30 hours a week, you would not qualifyforWorking Tax Credit from 6 April 2012.This isbecauseyou'll need to work 30 hours a week ifyou're aged 25 or over, unless anyof thefollowing apply:

you're responsible for a child or children you're aged 60 or over you qualifyfor the 'disabilityelement' of Working Tax Credit



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If you're aged 50 or over - workinghours changes Ifyou're getting the extra '50-plus element',you onlyneed to work at least

16 hours a week to qualifyfor Working Tax Credit. When the 50-plus element stops from 6April 2012, ifyou're not working a

certain number of hoursyour payments maystop altogether. You canincrease the hours you work, soyou would stillbe entitled to Working TaxCredit.

From 6April 2012,you'll need tobe working the following hours to qualifyfor Working Tax Credit.

If you are not responsible for at least one child You - oryour partner ifyou've got one - will need to work at least:

30 hours a week 16 hours a week - ifyou're aged 60 or over, oryou're entitled to the

'disabilityelement' of Working Tax CreditIf you're responsible for at least one child You'll still qualifyfor Working Tax Credit if either of the following applies: you're single and working at least 16 hours a week you're in a couple, and meet the new hours rules for couples

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Rates and thresholds

The rates and thresholds of the tax credits areshown below.

Rates andThresholds

April 2011 April 2012

Basic element 1,920 1,920

1. Couple and loneparent element 1,950 ,950

30 hour element 790 790

Disabled workerelement

2,650 2,790

Severe disability

element

1,130 1,190

50+ Return to workpayment(16-29 hours)

1,365 _

50+ Return to workpayment(30+ hours) 2,030 _



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Further information

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options atOnthedole.com

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