Benefits Expert: ‘How long will we continue to receive Tax Credits at these rates?’

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Q I WENT self-employed following redundancy in May 2010, but business was poor so I found another job in May 2011 which pays £20,000 pa.

 My wife was made redundant at the same time as me but found another job, although her wage dropped to £5,600 pa.

 She receives full Child Tax Credit and I have Working Tax Credit of £41 a month.

 How long will we continue to receive Tax Credits at these rates?


A TAX Credits are annual awards based upon annual income. The figure for annual income is usually the person’s (or couple’s) taxable income for the previous tax year.

 Your Tax Credits for the current year appear to be based upon an income of about £16,500 earned in the April 2010/April 2011 tax year.

 Although your income has since increased, this need not necessarily affect your Tax Credits for the current year.

 As long as this year’s income does not exceed last year’s by more than £10,000, your 2011/12 entitlement will not be changed.

 However, you can expect a drop after next April when your award will be based upon the increased income you had in the 2011/12 tax year.

 Your Tax Credits will continue to be paid at the current rate for some weeks after April until your award is reassessed. But these payments will still count as part of your next year’s award.

Q WHEN my lady friend, aged 61, retires in February she has been told she will not have to pay rent or Council Tax. But what will be the situation if I move in with her?

 I am 55 and take home £130 a week wages and receive £60 a week Reduced Earnings Allowance.

Ted (Shiney Row)

A IF you are treated as “living together as husband and wife” you will be assessed as a couple based on your combined incomes.

 Your friend would lose much, or even all, of her rent and Council Tax rebates and probably not be entitled to Pension Credit either.

 If you are not treated as a couple, however, your presence in the household would not affect her Pension Credit but you would be expected to make a weekly contribution towards rent and Council Tax.

 For you that would be £29.60 for rent and £5.70 for Council Tax.

 When deciding whether a couple live as husband and wife, the benefit authorities take a variety of considerations into account including the reasons why the pair came to be together.

 Where a couple live in the same household for reasons of “care, companionship and mutual convenience”, they should not usually be treated like a married couple.