Tax credits are only re-worked for the current tax year if your total income before tax and National Insurance increases by more than £2,500 from the previous tax year.
You need to check how much income you received in the previous tax year (which should be shown on your tax credit assessment, or on your P60 or final payslip prior to the previous 5 April) and work out if your income for the current tax year (ie from the last 6 April to the next 5 April) will be more than £2,500 higher.
If your income will increase by less than £2,500 you do not need to do anything.
If your income will increase by more than £2,500 from last year’s - or if you think it may - you need to tell the Tax Credit office within 30 days
of receiving the increase – preferably immediately.
If you don’t report in time you may be fined up to £300.
How to Report:
Ring the helpline on 0345 300 3900 or report online at www.gov.uk/changes-affect-tax-credits
Even if your income does increase by more than £2,500, the first £2,500 increase will be ignored in re-calculating your tax credits so your tax credit award for the current tax year will only fall by 41% of the excess of your increased income over £2,500.
If your income has increased by a total of £3,000 compared to last year’s income, your tax credit award for 2016/17 will reduce by £3,000 - £2,500 = £500 x 41% = £205 less.
There is more detailed advice at: www.entitledto.co.uk/help/how-tax-credits-work