Client circumstances:
Married, one child. Partner not working, client working 16 hours a week, earning £6.06 per hour.

They receive child ben and CTC but not WTC. it appears that they are not entitled as their joint earnings in the previous tax year (2003/2004)were above the limit.

End result is they are trying to live on an income of approximately £126 per week, OK, today is start of new tax year, and he can put in a new claim for WTC based on 2004/2005, but it seems rediculous that prior to today he wasn't entitled - is that indeed the case?

Sorry about what may be an obvious question, but we have a IRS call office locally, so most claimants deal directly with them.

Joint earnings in 03/04 shouldn't have reduced their 04/05 award in this way - unless they haven't informed the Tax Credit office of their changed circumstances.

Previous year income is normally used as the basis for Tax Credit awards, but if this income is different to current year - as in this case, Tax Credit should be amended to current circumstances.

They should be getting around £60 WTC a week, so hopefully they'll get it backdated.

When precisely did income decrease?

If they were both earning at a level comparable to 2003-04 for a large part of the 04-05 tax year, they may not have much, if any, backdated entitlement to come, because their *total* income for 04-05 won't have dropped by much, if any, compared to the *total* for 03-04.

We have to unlearn the habit of thinking in weekly terms when we deal with Tax Credits. They are not weekly benefits. They are annual amounts. The payments made during a tax year are really only payments on account based on an estimate of probable entitlement for the whole year, and so often current instalments bear sod all relationship to current income and other circs.

But don't get me started on that...

Thanks for the replies - the first decrease in earnings would have actually occurred in 2004/2005 when Mrs stopped to have her baby - the second in the same year when Mr lost his full time job.

PS:

It's not us that should have to unlearn - it's the IRS, that needs to bring itself into line with the rest of the western world: the last time I checked, the world was round, not flat.

Agreed we shouldn't have to. But...