Tax credits can be a confusing and complicated issue. We receive a number of questions regarding this subject, so we thought it would be worth creating a set of articles around the subject. If you have any question, please include them in the comments below and we will do our best to answer them.
What are tax credits?
Tax credits are payments from the government. There are two types of tax credits, Child tax credits and working tax credits.
Am I entitled to tax credits?
The Inland Revenue states that 90% of all people with children and eligible for tax credits. Even if you do not have children you may be entitled to some form of tax credits.
How much is tax credits?
There are a number of factors that will determine the amount of tax credits that you will recieve, including:
- How many children you are looking after and have living with you
- How many hours a week you work
- If you have to pay for child care
- If any of your children are disabled
Can a tax credit claim be backdated?
Yes, usually it is possible to back date a claim for 3 months. Sometimes there can be delays with the Inland Revenue and therefore it is advised to make your application as quickly as possible
What about overpayment’s of Tax Credits?
Sometimes the Inland Revenue can pay you too much. They may try and claw back this money by adjusting your future tax credits or they may ask you to pay the tax overpayment back. It is possible to dispute the overpayment demand from the Inland Revenue and this may be successful depending on a number of factors including:
- If they gave you the correct advice based on the information you gave them
- If they accurately recorded and used the information you gave them when you made a claim (or renewed your claim) to work out your tax credits and pay you the correct amount
- If you told them about changes in your circumstances throughout the year so they have accurate and up to date information
- If you told them about any mistakes on your award notice within one month of receiving it