Tax Credits

Tax Credits

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Can anybody confirm if the lower threshold for tax credits of £6420 is the total for two working joint claimants or is this per working person?

I assume it's the former but have clients who claim WTC and CTC. One is employed earning c£10k the other is self employed and available AIAs mean we could reduce income to nearly nil (if, as I expect, this maximises their joint tax credits claim) or to £6420 (the threshold) or purely to the point where no tax or class 4 nic is payable - more tax efficient obviously.

Hopefully somebody can clarify this for me.

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By stephenkendrew
21st Dec 2015 13:00

both combined

not for each working person.

 

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By DMGbus
21st Dec 2015 13:35

Online tax credits calculator

Income of £6,420 or less gets the full tax credits, so claiming Capital Allowances to reduce income below £6,420 is not cost effective.

You can run the figures on the following webpage to confirm this:

http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx

PS. Bear in mind that this HMRC calculator doesn't show a whole year's entitlement, it pro-ratas from a current date to next 5th April.

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Replying to lionofludesch:
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By nogammonsinanundoubledgame
22nd Dec 2015 09:20

Seriously?

mrme89A wrote:

for all related people living under that roof including parents, children, siblings, grandparents and other family members.


Has something changed in recent years?

I can find nothing in the legislation or manuals that requires a joint claim to include anyone other than those living "as a couple" ie married or in a similar relationship (including polygamous units but not including "vertical" relationships).  TCTM06100.

Likewise I can find nothing in the definition of income regulations that requires you to bring in income other than that of the claimants. TCTM04002.

With kind regards

Clint Westwood

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