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Tax Credit in UK

Question from one of our subscribers:

Does anyone have any advice for me, I seem to have fallen straight into a government trap!

In my first year of business I made nothing and I received tax credits. In my second year I earned more, and last year I earned more again. I just received a notice from HMRC saying I owe them £5,500 in overpayments. I’ve declared my earnings properly to them each year, so why on earth does this happen?

If you’re supposed to save tax credits in case of doing well in the future, surely that defeats the whole point of them?

Feel annoyed and embarrassed.

Answer:

Hi!

Not the first occasion when I’ve become aware of this happening, it fundamentally happens on the grounds that they request upgrades once for every year, and that is a year behind and they anticipate that wage will be around the same in the accompanying year where the recompensed sum is constantly paid, so when your business pay went up, their “excessive charge” was on account of they were paying their top up on their normal salary (like the prior year), instead of your genuine pay (because of the development of the business). They do say to advise them when something changes so you don’t get overpaid excessively.

Fundamentally as with a lot of people, it’s an imperfect and tiring framework, I know of other people who haven’t even gained their structures in the not so distant future yet without taking into consideration being checked on, implying that there will be a few who’s excessive charges may be more, I know this is of no reassurance to you, yet believe me when I say you’re a long way from alone!

 

 
 
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