means testing/tax credits


N

N Proust

I understand tax credit is not means tested but is based on income.
Am I right in thinking it makes no odds how much I have in a Tessa or ISA
and I have no need to declare any interest received from these to the tax
credit people, yet if I have £301 from shares then I have to declare.
What is the reasoning behind this when both are "income", albeit one taxed
at source one not?
Thanks for any replies
 
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A

Andy Pandy

N Proust said:
I understand tax credit is not means tested but is based on income.
Am I right in thinking it makes no odds how much I have in a Tessa or ISA
and I have no need to declare any interest received from these to the tax
credit people,
Correct.

yet if I have £301 from shares then I have to declare.
Yes. In fact it's £301 gross, including the tax credit with the
dividend (using the proper meaning of 'tax credit' here).
What is the reasoning behind this when both are "income", albeit one taxed
at source one not?
The reasoning is so that the tax credits system uses same definition
of income as the income tax system.

Except for - some maternity pay, first £300 of interest, any increase
over last year up to £25,000, and some others. Plus the most
fundamental difference that tax credits assess couples jointly whereas
income tax assesses everyone as individuals.

That's as close to 'reasoning' as you'll get for anything about the
tax credit system.
 

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