Overview: Changes in Customer's Current Income
A tax credit system based solely on previous year’s income would run the risk of not matching payments to customers current needs. To counter this, customers whose income falls significantly during the year can apply to have their awards re-assessed on the basis of a forecast of their current year’s income. The forecast income will be reconciled after the end of the year with the actual income for that year, and any tax credits overpaid will have to be repaid.
Dai is a self-employed carpenter who has had recent periods of unemployment. He works 32 hours a week. His income is low enough to entitle him to claim Working Tax Credit (WTC) for 2010/11 and his claim is based initially on the estimate of his 2009/10 income he provided by 06/07/2010. During the year he finds that his estimate of his CY earnings is significantly lower than the PY estimate that he has already supplied and he provides a revised lower estimate of his income.
The award is re-calculated and additional payments of tax credits made. He will need to provide his income by 31/07/2011. If he cannot provide actual income, he will need to provide a further estimate 31/07/2011 and provide actual income figures, if different, by 31/01/2012.