Did you know that the rules regarding tax credits are changing from 6 April 2012?
Rules surrounding working hours, income limits and the amount of time that payments can be backdated are all changing in a few months time and you should be prepared.
Our guide looks at the major changes to tax credits that come into force in April 2012.
Changes to the income limits for Child Tax Credit
At present, Child Tax Credit payments depend on your income and on your personal circumstances. You can normally receive some tax credit as long as your income is under £41,300.
However, from 6 April 2012, this limit will be lower for most people. As a rough guide, you might not be able to get child tax credit from 6 April 2012 if:
- You have one child and your annual income is over around £26,000
- You have two children and your annual income is over around £32,200
Bear in mind that these limits are not definite and that you may receive more or less Child Tax Credits depending on your own situation. For example, from April 2012 you could still qualify if your income is higher than these amounts if you pay for approved childcare or if you have more than two children.
Changes to working hours rules for Working Tax Credit
If you are responsible for at least one child and you work at least 16 hours per week you can get Working Tax Credit.
However, from April 2012, the rules for couples with at least one child are changing. From April, your joint working hours will normally need to be at least 24 hours per week.
This will mean:
- If only one of you work, that person has to work at least 24 hours per week
- If you both work you have to work a total of 24 hours per week with one of you working at least 16 hours per week
If neither of these apply, your working tax credit will stop from 6 April 2012 – although there are some exceptions to these rules.
Changes to how far Tax Credit payments can be backdated
Currently, when you make a new claim for Tax Credits, the Tax Credit Office can backdate your claim for up to three months before they receive your claim form.
However, from 6 April 2012, this ‘backdating’ period will reduce to one month. This means that if the Tax Credit Office receives your claim on or after 6 April 2012, they will only be able to backdate it up to one month.
This will affect you if you delay making a tax credit claim. For example, if you have a baby on 1 August 2012 but you do not submit your Tax Credit claim until 1 November 2012, your payments will only start from 1 October 2012 (not 1 August 2012 as they do currently). You will therefore lose two month’s Tax Credit payments.