Tax Credits

HMRC are in the process of sending out renewal packs to Tax Credits claimants for the tax year 2011-12. If you wish to renew your claims, make sure that you submit the forms before the 31 July 2011 deadline otherwise your payments may stop.

The tax credits helpline number is 0845 300 3900.

Claimants should make sure that any information returned on their claim form is accurate. HMRC may check earnings details with employers.

Information you will need to report includes:

  • Working hours
  • Childcare costs
  • Pay
  • Income details 2010-11.

Claimants on “nil awards” and those that only receive the full family element of Child Tax Credit will receive a statement setting out their 2010-11 award. If this statement is correct there is no further action to take, your claim should automatically be renewed.

Chilcare and Child Tax Credits

In order to qualify for Child Tax Credits (CTC’s) the person responsible for taking care of your children (child) had to be registered with the Childcare Approval Scheme.

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From 18 July 2009 the Childcare Approval Scheme ceased to exist and all childcare providers approved under this scheme (for example a nanny or foster carer working as a childminder) must either become registered with Ofsted or they will become unregistered providers.

Taxpayers who are affected by this change are advised to check with their childcare provider to see what they have done or plan to do.

It is no longer possible to claim tax credits unless the childcare provider is registered with Ofsted from 18 July 2009.

If a childcare provider does not intend to register with Ofsted, an alternative registered provider would need to be used in order to be able to claim or continue claiming the childcare element of tax credits.

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Tax credits – can you claim?

You may be eligible for tax credits if you fit into the following criteria:

– If you are responsible for at least one child or young person who normally lives with you, you may qualify for Child Tax Credit.

– If you work, but earn modest wages, you may qualify for Working Tax Credit.

In both cases the amount of your claim will depend on your income.

As always there is a minefield of small print to negotiate before you can establish if you have a valid claim.

Generally speaking you may qualify for some element of tax credit if the following circumstances apply:

  1. You will need to live and work in the UK
  2. Be aged 16 years or over
  3. If you don’t have children and you are under 25, you probably don’t qualify for tax credits unless your partner is 25 or over and they normally work over 30 hours a week.
  4. Your household income must not exceed £58,000 per year. Household income means money you (and your partner if you have one) have coming in each year including:
  • your wages and benefits from employment
  • any earnings from self-employment
  • any interest on savings and investments you have
  • some, but not all, state benefits
  • pensions
  • money from abroad
  • money from property you own, e.g. rent

It does not include money that other members of your household have coming in.

If your income starts to fall as a result of the current slow-down you may become eligible to claim tax credits.

It is important to realise that as a business owner to a degree you can manipulate what your income is, by purchasing capital assets (eg plant and equipment) or by making pension contributions.

Please don’t hesitate to contact us if you would like more information or to chat about this subject.