I have a client who is intending to take an unpaid sabbatical off work for most of 2009/10 tax year. I am looking at the tax credit position for him.
- 2008/09 joint income is approx £30,000.
- 2009/10 joint income is expected to be £10,000. Because of number of children, this would give them a significant tax credits award.
- 2010/11 client intends to return to work, producing joint income back at £30,000.
Am I correct in my understand that the 2010/11 tax credits will be based upon the 2009/10 income and, as the increase in income for 2010/11 is less than £25,000, no clawback will take place ?
Is this too good to be true ?