Question
Hi, we currently receive child tax credits for our three children, my eldest receives high rate disability living/mobility allowance and our twins are almost 11 months. I am trying to work out how our child tax credits will be affected with the new budget but cannot find the answer as nowhere seems to mention the disability element.
I realise the baby element will end in August this year anyway and that our award will naturally decrease then but it's mainly from the new tax year (2011) and April 2012 that I have concerns.
My husband earned 29.5k last year and I receive carer's allowance for our disabled son currently £2800 per year making our joint income £32300. I would like to know what our new awards will be in the next two years (if any)? Many thanks.Answer
Good news in that with the exception of the baby element it looks likely you’ll be very slightly better off following changes to child tax credits over the next couple of years. I’ve ignored working tax credit from my calculations (as it makes things very complex), but this should make little, if any difference.
For the current tax year you’re entitled to the family element of £545, plus two new born payments of £545 for your twins and three child elements of £2,300 each. In addition you’re entitled to the disabled child element of £2,715 for your eldest (plus an extra £1,095 if he’s eligible for the severely disabled child element).
The child elements, including the additional disabled element, are added together to calculate an overall entitlement, which is then reduced by 39p for every £1 your joint income (including carer’s allowance) exceeds £16,190. On an income of £32,300 this means your overall child element entitlement will be reduced by £6,283. If we assume child elements of 3 x £2,300 + £2,715 + £1,095 = £10,710, you’ll receive £4,427.
The family and baby elements reduce when household income exceeds £50,000, so you’re entitled to the full amount of £545 x 3 = £1,635 – making a total £6,062 for the year. Although, as you point out the baby element will cease when your twins are one next month (it’s disappearing altogether from next April).
There are three main changes that will affect you from next April:
1. Your entitlement to the child element will reduce by 41p per £1 your income exceeds the lower limit (currently £16,190).
2. The allowances and payments will be linked to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI). Bad news as CPI tends to be lower (as it excludes housing costs).
3. The child element will increase by £150 above inflation (measured by CPI).
Ignoring inflation this means your child elements will increase from £2,300 to £2,450. The disability elements are unaffected; they’ll simply increase by CPI. So your overall entitlement to elements will increase to £11,160. Assuming income of £32,300 and an income limit of £16,190 (again, I’m ignoring inflation) your entitlement will be reduced by £6,605, so you’ll receive £4,555 plus the £545 family element.
From April 2012 the child element is due to increase by £60 above inflation, which should boost the amount you receive slightly.
Obviously if your household income rises above inflation (measured by CPI) then you could end up worse off. But for the time being it looks like you’ll escaped the worst of the Chancellor’s child tax credit cuts.
Hi, we currently receive child tax credits for our three children, my eldest receives high rate disability living/mobility allowance and our twins are almost 11 months. I am trying to work out how our child tax credits will be affected with the new budget but cannot find the answer as nowhere seems to mention the disability element.
I realise the baby element will end in August this year anyway and that our award will naturally decrease then but it's mainly from the new tax year (2011) and April 2012 that I have concerns.
My husband earned 29.5k last year and I receive carer's allowance for our disabled son currently £2800 per year making our joint income £32300. I would like to know what our new awards will be in the next two years (if any)? Many thanks.Answer
Good news in that with the exception of the baby element it looks likely you’ll be very slightly better off following changes to child tax credits over the next couple of years. I’ve ignored working tax credit from my calculations (as it makes things very complex), but this should make little, if any difference.
For the current tax year you’re entitled to the family element of £545, plus two new born payments of £545 for your twins and three child elements of £2,300 each. In addition you’re entitled to the disabled child element of £2,715 for your eldest (plus an extra £1,095 if he’s eligible for the severely disabled child element).
The child elements, including the additional disabled element, are added together to calculate an overall entitlement, which is then reduced by 39p for every £1 your joint income (including carer’s allowance) exceeds £16,190. On an income of £32,300 this means your overall child element entitlement will be reduced by £6,283. If we assume child elements of 3 x £2,300 + £2,715 + £1,095 = £10,710, you’ll receive £4,427.
The family and baby elements reduce when household income exceeds £50,000, so you’re entitled to the full amount of £545 x 3 = £1,635 – making a total £6,062 for the year. Although, as you point out the baby element will cease when your twins are one next month (it’s disappearing altogether from next April).
There are three main changes that will affect you from next April:
1. Your entitlement to the child element will reduce by 41p per £1 your income exceeds the lower limit (currently £16,190).
2. The allowances and payments will be linked to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI). Bad news as CPI tends to be lower (as it excludes housing costs).
3. The child element will increase by £150 above inflation (measured by CPI).
Ignoring inflation this means your child elements will increase from £2,300 to £2,450. The disability elements are unaffected; they’ll simply increase by CPI. So your overall entitlement to elements will increase to £11,160. Assuming income of £32,300 and an income limit of £16,190 (again, I’m ignoring inflation) your entitlement will be reduced by £6,605, so you’ll receive £4,555 plus the £545 family element.
From April 2012 the child element is due to increase by £60 above inflation, which should boost the amount you receive slightly.
Obviously if your household income rises above inflation (measured by CPI) then you could end up worse off. But for the time being it looks like you’ll escaped the worst of the Chancellor’s child tax credit cuts.
Read this Q and A at http://www.candidmoney.com/questions/question239.aspx
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