Home carers tax credit and returning to work

[Super critical]

Hi,

I am trying to make sense of the best way to approach our tax situation for 2020. To give some brief background we are jointly assessed and I work full time currently earning 45k, my wife was on maternity leave last year and is now on jobseekers benefit (she was made redundant prior to going on mat leave). For 2020 revenue have automatically added in the home carers tax credit to our tax credit cert which at first I thought was great but on reading further I am seeing that you can not claim the increased standard rate band if you claim this credit.

To put it simply I take it that not being able to claim the increased standard rate band would mean she would pay 40% tax on any money she earned in the year (less the tax credits). She is planning to return to work in the coming months and with her qualifications and experience would likely be looking at salaries of 50k+ so paying tax at 40% on everything would be very costly. So I'm trying to figure out how is best to approach things.

Can we partially claim the home carers tax credit for a few months while she isn't working and then switch to the increased standard rate band when she goes back to work or do you have to stick with one? When she goes back to work on a good salary she will no longer be eligible anyway for it and would get the employee ta credit in its place if I understand correctly so how does that all tie in together? I am fairly competent on tax matters but this really looks like a very confusing one especially as they just gave us the credit, luckily I did some reading up on it.

I haven't informed payroll at work yet that I have increased credits so there is still time to not claim it if this is the best option. If I dont want to claim it do I just delete it on myaccount?

Thanks.

 

[Nutso]

Yes you can continue to claim the home carer's tax credit while your wife is not working. When she returns to work, you should inform Revenue and they will amend your tax credits and put you on a "week 1" basis until the end of the year.
You no longer inform your Payroll Dept of anything - your tax details will issue automatically from Revenue to Payroll and they must use these details and cannot amend them in any way. Amendments can only come from Revenue (via you speaking directly with them or via your "myaccount" on Revenue).

 

[Super critical]

Great, thanks. The way its worded it sounded like if you went with the home carers credit that you were stuck with it. It makes much more sense that you can change mid year.

On informing payroll, I know they are supposed to get the details automatically but wasn't sure if they always check or just go with the previous months details rather than request an update from revenue every month.

 

[Nutso]

With payroll modernisation, we need to check for new RPN's (Revenue Payroll Notification - these have replaced the P2C's) each pay run. We cannot for e.g. run a 2020 payroll with a 2019 RPN.

 

[Super critical]

Just revisiting this as I am a little confused by a few things around the home carers credit and how revenue have amended my tax credit cert as of today. I plan to contact them but I would like to get everything clear in my head first.

The first thing to clear up before I go into more details is does jobseekers benefit count as income when dealing with the home carers tax credit? As I know the carers income must be below 7200 to claim the credit but considering 12 months of jobseekers payment that is over 7200 (its stupid considering 12 months of JB payments imo as you can only claim it for 9 months but that's how revenue are doing it).