A REFUND for overpaid tax might comes as an unexpected relief for some low-income families – but will it affect your benefit payments?

How much Universal Credit you get is based on your household income, meaning that a tax rebate could end up messing up your budgets.

 A tax rebate might come as a relief to some but it may also affect your Universal Credit payments

1

A tax rebate might come as a relief to some but it may also affect your Universal Credit paymentsCredit: Getty – Contributor

Here, we take you through everything you need to know about how a tax rebate affects your benefit payments.

What is a tax rebate?

If you’ve overpaid on your tax bill then you will be owed a refund – this is known as a tax rebate.

You may have paid more than you need to for a number of reasons, such as you have the wrong PAYE tax code.

You can get a tax refund regardless of whether you’re self-employed or in full-time work.

What to do if you have problems claiming Universal Credit

IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover costs, here are your options:

Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it’s a loan which means the repayments will be automatically deducted from your future Universal Credit pay out.

Alternative Payment Arrangements– If you’re falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you’re part of a couple.

Budgeting Advance – You may be able to get help from the government to help with emergency household costs of up to £348 if you’re single, £464 if you’re part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You’ll have to repay the advance through your regular Universal Credit payments. You’ll still have to repay the loan, even if you stop claiming for Universal Credit.

READ  Ad giant WPP pulls dividend, buyback and outlook

Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your payments aren’t enough to cover your rent.

Foodbanks – If you’re really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussel Trust website.

You will need to apply for a rebate from HMRC, which will then be transferred into your bank account within five to eight working days.

Alternatively, you can wait for up to 45 days for the government to send you a cheque through the post.

Does it count as income?

You won’t have to pay income tax on any rebate you receive from HMRC.

But it will count as income when it comes to working out how much you’re entitled to for Universal Credit.

Will it affect by Universal Credit payment?

Most state benefits, including Universal Credit, are not taxed as income.

But any income that you make during an assessment period is taken into consideration when working out how much Universal Credit you receive that month.

Low-income families earning above a certain threshold will lose 63p from their Universal Credit payment for every £1 they earn.

The thresholds are currently set at £287 if your payment includes housing support or £503 if you don’t.

The idea behind the rate is that it “pays to work”, although critics say that it’s too high.

The Sun’s Make Universal Credit Work campaign calls for the taper rate to be slashed to 50p and the work allowance raised to help at least four million families.

READ  May to travel to Belfast for funeral of journalist Lyra McKee

Your tax rebate may bring you above the taper rate threshold meaning that your welfare payment may be affected.

The Sun wants to Make Universal Credit Work

UNIVERSAL Credit replaces six benefits with a single monthly payment.

One million people are already receiving it and by the time the system is fully rolled out in 2023, nearly 7 million will be on it.

But there are big problems with the flagship new system – it takes 5 weeks to get the first payment and it could leave some families worse off by thousands of pounds a year.

And while working families can claim back up to 85 per cent of their childcare costs, they must find the money to pay for childcare upfront – we’ve heard of families waiting up to 6 months for the money.

Working parents across the country told us they’ve been unable to take on more hours – or have even turned down better paid jobs or more hours because of the amount they get their benefits cut.

It’s time to Make Universal Credit work. We want the government to:

  1. Get paid faster: The Government must slash the time Brits wait for their first Universal Credit payments from five to two weeks, helping stop 7 million from being pushed into debt.
  2. Keep more of what you earn: The work allowance should be increased and the taper rate should be slashed from from 63p to 50p, helping at least 4 million families.
  3. Don’t get punished for having a family: Parents should get the 85 per cent of the money they can claim for childcare upfront instead of being paid in arrears.

Together, these changes will help Make Universal Credit Work.

Join our Universal Credit Facebook group or email UniversalCredit@the-sun.co.uk to share your story.

For example, let’s say that you normally top up your £500 Universal Credit payment, including housing benefit, with £150 a month in earnings.

READ  Trade tensions rise as US threatens car tariffs

This month, you’ll get a £200 rebate. In this case, your payment will be affected.

The rebate will bring you £63 (£200 plus £150 minus £287) above the threshold, meaning that £39.69 will be taken off your Universal Credit payment.

But if your rebate is for £100 then your payment won’t be affected because your total income will be £250, which is still under the threshold.

A tax rebate will still increase your overall household income but it might not be by as much as you think because of the taper rate.

How do I check if I’m owed a refund?

If you are due a tax rebate HMRC will let you know by sending you a letter called a P800.

These can also tell you that you haven’t paid enough tax, so don’t get too excited when one comes through your letter box.

You will only get a P800 after the tax year has ended in April – the letter won’t usually arrive till around September.

If you don’t receive a P800 and think you have overpaid on your tax you can use the government’s income tax calculator to figure out how much you should of been paid.

Martin Lewis warns millions of workers to check tax codes before April





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here