Tax Credits

Since its introduction on 6 April 2003 the tax credits system has been heavily criticised but despite the problems, mainly relating to overpayments of credit and an overly complicated system, it is doubtless that clergy families have benefited enormously.

We split claimants into 2 categories, those that have an income sensitive award and those that don’t.  Those that don’t tend to only receive the family element which is currently £547.50.  This may be slightly higher if one or more of your children is under the age of one for at least part of the tax year.  Claimants that just get the family element normally only lose credit if their income exceeds £50,000 and consequently even if you don’t work the figures out correctly it’s unlikely to make any material difference. 

We tend to concentrate on the clients that receive a tax credit award that is sensitive to changes in income – about 25% of clergy families.  If you calculate your income incorrectly, on average you will lose about 39% of the discrepancy in credit, i.e. an error of £1,000 would cost you £390.  You should consider the following questions and ask yourself, am I calculating my income correctly and getting the most out of tax credit:

• For clergy income should you use the figure off your P60 or the Minister of Religion schedule that accompanies your Tax Return?
• Should Church of England ministers deduct the ‘HLC’ from their pay or include their gross stipend?
• Do I need to include benefits in kind and how do I work them out?
• What working expenses (car, use of home, equipment purchase, administrations costs, etc) if any, can I deduct?
• I pay for childcare, but should I claim these costs through tax credit or join my employer’s scheme?
• What types of investment income do I include?
• Do I need to include the wages I pay to my wife?
• Could I improve my tax credit by using a different investment strategy?     
• How much can I deduct for pension contributions and gift aid payments?
• What is the figure I use for my rental income?
• How do I know that the Revenue has worked out my credit correctly, i.e. do you understand the full calculations?

In our experience the provision of incorrect information is usually the reason that clergy are not getting the amount of credit they are truly entitled to.  There is a real lack of clear and concise guidance available that deals with the peculiarities of clergy income.  Our aim is to ensure that as well as meeting your obligations and providing the correct information, you are advised about how you may increase your tax credit with sound guidance.

Educational Maintenance Allowance

EMA can give your children up to £30 a week to help them get more qualifications or vocational skills after 16.

The relevant courses include full-time further education courses at college or school, an LSC-funded Entry to Employment (e2e) programme, or a Programme Let Apprenticeship.  At present the following income thresholds apply:

Clearly it is important to ensure that you have calculated your income correctly.  The definition of income is exactly the same as for tax credit and we recommend that you use your final tax credit award notice rather than try to squeeze your clergy income figures into the boxes on the EMA form.  They simply won’t all fit!  Obviously you need to be doubly sure your tax credit is right if you are claiming EMA as you could end up losing out on both.

We can ensure you provide the right information and again, like tax credit, may even by able to advise you how to improve your child’s entitlement.

Student Loans

We provide a comprehensive service for the completion of the parent’s income section of the student finance assessment forms.  We recommend the completion of a further form, GSA1, which acts as accountant certification of income.  The early deadline set by local authorities of the end of May is not set in stone but is always achievable if we receive the Tax Return information from you in good time.