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Tax credit overpayment caused by Carers Allowance increased amount being taxable.
I am totally out of my depth on this one.
Got a call from someone who has a tax credit overpayment and they have told him it is because the extra amount he gets for his child in Carers Allowance is taxable. It’s only a small overpayment but he wants to get it sorted as it happens every year apparently.
He wants to challenge the overpayment as he believes that tax credit are wrong and that it is not taxable. He wants the regulations to refer to so he can write to them. I looked in CPAG and I can see these extra amounts were abolished ten years ago, I’ve never come across anyone claiming these I don’t think.
Does anyone have any idea on this? He’s out of my area so I can’t take it on anyway but I said I would send him the relevant regulations so he can use that to challenge the overpayment.
Thanks
I thought that a Child Dependency Increase in Carer’s Allowance was disregarded but it looks like I was wrong:
For income tax it is disregarded, which is probably the source of the confusion.
Looking at this again though:
(4) If an increase in respect of a child dependant is payable with an allowance, benefit, pension or other payment (“the main payment”) listed in Table 3, the increase shall also be wholly disregarded in calculating the income of the recipient of the main payment.
Does it not depend upon how you punctuate and read it? Does the ‘allowance, benefit or pension’ have to be listed in Table 3.
Thanks both. He did also mention income tax a few times.
I am not sure on that Table 3 query either.
(4) If an increase in respect of a child dependant is payable with an allowance, benefit, pension or other payment (“the main payment”) listed in Table 3, the increase shall also be wholly disregarded in calculating the income of the recipient of the main payment.
I think that the ‘or’ is disjunctive otherwise why not just state ‘any item listed in Table 3’? If this is the case then CDI in Carer’s Allowance should be disregarded as income for tax credits. Isn’t the general principle for Tax Credits that it is taxable income that is taken into account anyway and if Carer’s Allowance CDI is not taxable…...
It also already says that earlier right? -
(3) In calculating the claimant’s social security income the payments in Table 3 shall be disregarded.
This old CPAG link also says -
“Carer’s allowance (CA) (including an increase in your CA for your spouse, civil
partner, or someone who cares for your child, if you still receive this) is
taxable.38 However, increases for children (if you are still receiving them) are not
taxable.”
“CA counts in full as income for all means-tested benefits. However, in some cases
an increase in your CA for an adult or child can be ignored when calculating your
means-tested benefits.”
https://cpag.org.uk/sites/default/files/CPAG-Handbook-contents-sample-chapter_0.pdf
I disagree. (CPAG also say it counts as income for tax credits (page 1449 of the 19-20 edition).)
If the ‘or’ is to be read like you’re saying, then ‘(“the main payment”)’ is in the wrong place. It should say ‘allowance, benefit, pension or other payment listed in Table 3 (“the main payment”)’.
Also, it would be strange that ‘allowance’, ‘benefit’ and ‘pension’ are not defined anywhere.
Another thing is the word ‘also’ which suggests the main payment is something ignored too. You could get out of this by saying ‘also’ simply means besides the other things ignored under paragraph (3), but then for consistency they would also use the word ‘also’ in paragraph (5).
To answer your question why paragraph (4) is needed after we already have paragraph (3), I think that is simply because child additions are included under a different section of the SS(C&B) Act 1992 than the main payment, and the table in paragraph (3) refers to the legislation for the main payment.