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.