Band 1 Credit reduction

D

DannyBoyD

Registered User
Messages
4,116
Helping out relative with tax credits.
Certificate shows relative in receipt of both a contributory and non-contributory pension (they are not & I didn't think that was even possible!).
The other item listed is a Band 1 Credit Reduction - online searches only bringing up PUP payments which they didn't get. No illness or disability benefit either.

I've logged an enquiry on the contributory and non-contributory pension deduction; but I'm not sure what the Band 1 credit reduction might be for?
 
The two pensions is distorting your relative's tax credits, and you were right to log this query with revenue, as I too never heard of an individual in receipt of two old age pensions from Welfare. If he/she is in receipt of the SCOAP in 2025 (52 x €289.30 = €15,053.60) the only adjustment should be the reduction in tax credits by €3010.72 (€15,053.60 @ 20%), leaving them with net tax credits of €1234.28, presuming they had the €4245 over 65 single tax credits, along with the reduction of their single standard rate tax band of €44,000, to now €28,946.40, to facilitate the pension payment of €15,053.60.
If the second pension was listed as say €10,400, now you have exceeded your tax credits of €4245 (15053.60 + 10400 @ 20% = €5090.72) by €845.72, leaving a negative net tax credit and this in effect, causes the band 1 credit reduction within the standard rate tax band, to be reduced, by grossing up @ 20% = €4228.60.
This method was indeed used for those in receipt of the PUP payments.
Hope this helps in some way.
 
For people who are in receipt of a non-taxable DSP payment and other taxable income, it is normal for the tax credits and SRCOP to be reduced, to account for the tax due on the non-taxed DSP income.
 
DannyBoyD said:
By this do you mean a Social Welfare payment which is not assessed for tax?
Click to expand...
Presumably one of these payments?

Tax-exempt DSP benefits

This page explains tax-exempt DSP benefits
www.revenue.ie www.revenue.ie
DannyBoyD said:
What is SRCOP?
Click to expand...
Standard Rate Cut-Off Point - the amount of one's income subject to 20% tax.

Tax rates, bands and reliefs

This page shows the tables that show the various tax band and rates together with tax reliefs for the current year and previous four years
www.revenue.ie www.revenue.ie
 
In theory, you can apply for both a Non-cont and a Cont pension and you can be awarded both but only get paid the highest
 
There's a note on the 'completed' enquiry that a new tax cert will be issued shortly. Nothing else. Until the document issues I guess we won't know for certain. Hence my irritation.

Checking back it looks like there's been an overpayment of tax since at least January of this year. So hopefully there'll be a bit of money back - might even get treated to lunch ;)
 
You must log in or register to reply here.
Back
Top