Appendix D: Payments page of a revised award notice and explanatory note
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Child Tax Credit | |
| Amount for period | |
| MRS LUCINDA JANE GREY will receive Tax Credit as shown below | |
| The full amount due for the period is | £1283.24 A |
| Amount you owe us that will be collected from future years | £1584.92 B |
| Less amount we have already paid you for this period | £611.03 C |
| Less the amount you owe us from previous years | £1731.98 D |
| Amount to be paid | £525.15 E |
| Our records show that you have received too much tax credit for the year(s) 2004 – 2005. We will collect this from you by reducing your tax credit payments until the amount overpaid has been paid back to us. | |
Working Tax Credit | |
| Taking your income into account, the amount of Working Tax Credit due is reduced to nil. | |
| Amount you owe us that will be collected from future years | £90.95 F |
| Less amount we have already paid you for this period | £83.95 G |
| Less the amount you owe us from previous years | £90.95 H |
| Amount you have to pay back | £93.95 I |
| Our records show that you have received too much tax credit for the year(s) 2004 – 2005. We will collect this from you by reducing your tax credit payments until the amount overpaid has been paid back to us. | |
| CTC means Child Tax Credit. | |
| WTC means Working Tax Credit. | |
Explanation of amounts
The lettered boxes do not appear on award forms, just the amounts.
Our Code of Practice 26 What happens if we have paid you too much tax credit? explains the percentage rate, 25% or 10%, at which we recover overpayments for a previous year.
A This is the total amount of CTC due to Mrs Grey in the award period.
B Mrs Grey was overpaid £1731.98 CTC in the year 2003 - 2004. The overpayment is collected back by reducing the amount of CTC paid in 2004 - 2005 and later years. We work out how much of the total overpayment can be collected in 2004 - 2005. This is 25% of the net tax credits due to Mrs Grey for the rest of the period, calculated as follows.
CTC due (item A) £1283.24
Minus WTC overpayment (item I) £83.95
Minus CTC paid to date (item C) £611.03
Amount due for the rest of the period = £588.26
25% of £588.26 = £147.06
The figure shown at B is the total overpayment (D) minus the amount to be collected this year.
That is, £1731.98 - £147.06 = £1584.92
C This is the amount of CTC paid from 6 April to the date the award form is issued.
D This is the total amount of the 2003 - 2004 overpayment. The difference between this figure and item B is the amount of the overpayment being collected in 2004-05, in this case £147.06.
E This is the amount of CTC that will be paid in 2004-2005. It is made up as follows.
A minus C £1283.24 - £611.03= £672.21
Minus (D minus B) £1731.98 - £1584.92= £147.06
Amount to be paid = £525.15
F This is the amount of WTC overpayment of WTC that will be collected in 2005 - 2006 or later years. It cannot all be collected in 2004 - 2005 because the maximum recovery level of 25% has been reached.
G This is the provisional amount of WTC paid so far in 2004 - 2005. Mrs Grey's income is high enough to reduce her WTC payments to nil in 2004 - 2005.
H This is the overpayment of WTC in 2003 - 2004.
I This is the amount of WTC overpayment that is being collected back from CTC payments.
Mrs Grey is paid CTC every four weeks. We work out
- the next available payment date
- the number of days between that date and the start of the next complete four weekly period, and
- the number of complete four-weekly payment periods between that date and 5 April 2005.
We round down the daily amount paid in this calculation and add these amounts to the first payment. This is why Mrs Grey receives £43.10 for her first payment and £39.81 for the remainder.
Amount to be paid in 2004 – 2004 £525.15
Deduct WTC overpayment being collected from CTC payments because there is currently no WCT in payment £83.95
Amount left to be paid after deductions £441.20
This is paid as one payment of £43.10 followed by ten payments of £39.81
K This figure shows what Mrs Grey's regular payments will be in 2005 - 2006 based on current tax credit rates. It takes into account Mrs Grey's circumstances at the date the award form was issued, and any known changes that will occur after 6 April 2005. For example, a child leaving full time education or a baby being older than one.
We estimate that Mrs Grey's CTC for 2005 - 2006 will be £1218.79, but we will deduct 25% because she still has an overpayment from 2003 - 2004 to be collected.
So we will pay 75% x £1218.79 = £914.09
This is paid as one payment of £72.65 followed by twelve payments of £70.12
These payments are higher than those for the rest of 2004 - 2005 because the payments for the rest of 2004 - 2005 take account of the amount Mrs Grey has already been paid this year. Mrs Grey has been paid about half of her award for 2004 - 2005 in the first few months, so her payments over the rest of that year have been reduced to pay the right amount overall.
