Tax Credits and Rate Band

The Ayatolla

Hello,

Just a quick question for people who will know more than me on this topic.

I got my 2011 Tax Credit cert a few weeks ago. Last week I claimed Rent Tax Credit to the value of 320 and this increased my Gross Tax Credits by 320.

Jumping to the end of the new Tax Credit form I have now received, this 320 has increased my yearly, monthly and weekly Tax Credits but my Tax Rate Bands have stayed the same as before the addition of the 320 Rent Tax Credit.

On both tax credit forms, the one before the rent tax credit was claimed and the one after the rent tax credit was claimed, my income taxable at 20% is the same on both. Is this correct? I would of thought my taxable income at 20% would of increased? If not, then where do I reap the rewards of the Rent Tax Credit?

Reganovski

The Ayatolla wrote: »

Hello,

Just a quick question for people who will know more than me on this topic.

I got my 2011 Tax Credit cert a few weeks ago. Last week I claimed Rent Tax Credit to the value of 320 and this increased my Gross Tax Credits by 320.

Jumping to the end of the new Tax Credit form I have now received, this 320 has increased my yearly, monthly and weekly Tax Credits but my Tax Rate Bands have stayed the same as before the addition of the 320 Rent Tax Credit.

On both tax credit forms, the one before the rent tax credit was claimed and the one after the rent tax credit was claimed, my income taxable at 20% is the same on both. Is this correct? I would of thought my taxable income at 20% would of increased? If not, then where do I reap the rewards of the Rent Tax Credit?

Your tax bands are used to calculate how much tax you are going to pay i.e. if you earn more than your tax band, you pay tax @ 41%, below that you pay @ 20%.
While your tax credit is deducted off your total calculated tax. Therefore by your tax credit increasing you pay less tax.

The Ayatolla

Reganovski wrote: »

Your tax bands are used to calculate how much tax you are going to pay i.e. if you earn more than your tax band, you pay tax @ 41%, below that you pay @ 20%.
While your tax credit is deducted off your total calculated tax. Therefore by your tax credit increasing you pay less tax.

But by claiming the rent tax relief credit for 320 tax credits, the band at which I pay tax at 41% didn't change when I compared the updated tax credit cert I got to the one I got in January.

TiGeR KiNgS

The Ayatolla wrote: »

But by claiming the rent tax relief credit for 320 tax credits, the band at which I pay tax at 41% didn't change when I compared the updated tax credit cert I got to the one I got in January.

The ''Tax Bands'' don't change, ie your tax band should be 32,800 if your single and is the same for everyone. Its your ''Tax Credits'' that change. I think your mixing them up

The Ayatolla

Ok.

For 2010 I claimed my Rent Tax Relief and the revenue put the money into my bank account.

I've also claimed my 2011 Rent Tax Relief and I got an up to date 2011 Tax Cert.

My question I suppose is, how do I gain financially from the 2011 Tax Relief?

namenotavailablE

By having the rent tax credit included on your certificate of tax credits in 2011 you will pay a little less PAYE each pay period than would otherwise be the case.

In 2010, as you hadn't got it on your certificate, you had basically overpaid PAYE during the year so the Revenue commissioners paid the value of the credit into your bank account.

allthedoyles

The Ayatolla wrote: »

Ok.

My question I suppose is, how do I gain financially from the 2011 Tax Relief?

You gain to the total amount of € 320 for 2011. - €26 if you are paid monthly and € 6.15 weekly .

Remember if your circumstance changes in 2010 , and you leave private rented accomodation , you lose this tax credit , so its best to inform the tax office in this case .

I think it is slightly unusual to receive this tax credit in advance , and most people I know , normally claim this at year end .

The Ayatolla

Thanks for the answers.

Fairly clear now.

barneystinson

allthedoyles wrote: »

You gain to the total amount of € 320 for 2011. - €26 if you are paid monthly and € 6.15 weekly .

Remember if your circumstance changes in 2010 2011, and you leave private rented accomodation , you lose this tax credit , so its best to inform the tax office in this case .

I think it is slightly unusual to receive this tax credit in advance , and most people I know , normally claim this at year end .

It's not unusual at all to receive the rent tax credit "in advance" - certainly a lot of people first start getting the credit by making a claim for back years, but like a lot of tax credits (e.g. one parent family, home carers), once you make a claim you'll continue to receive it until you notify Revenue that you are no longer entitled to it. (Or it comes to their attention by some other means that you are not entitled to it).