Worked Example – Payment Profile For A Revised Award

Contents

Case details - initial award
Case details – revised award

click here to return to topCase details – initial award

The capture process produced the following claim details

  • Effective date 02-05-2009
  • Processing date 06-05-2009

Claimant 1 details

  • Date of birth is 30-04-1970 aged 39 at 02-05-2009
  • Works 16 hours per week

Claimant 2 details

  • Date of birth is 01-08-1967 aged 41 at 02-05-2009
  • Works 10 hours per week

Children

  • Took responsibility for two children, dates of birth – 20-09-1992 and 08-07-1995. Aged 16 and 13 respectively, at 02-05-2009

Income

  • For 2008-2009 tax year - £18,600

The claim satisfied both the Working Tax Credit (WTC) and Child Tax Credit (CTC) eligibility rules and the initial award calculation. The results were as follows

Entitlement Period 1 02-05-2009 to 31-08-2009 – 122 days long

EntitlementAmount for periodDaily rate due
WTC Work ElementsNilNil
CTC Individual Elements£1,162.14£9.53
CTC Family Element£183.00£1.50


Entitlement Period 2 01-09-2009 to 05-04-2010 – 217 days long

EntitlementAmount for periodDaily rate due
WTC Work ElementsNilNil
CTC Individual Elements£736.88£3.40
CTC Family Element£325.50£1.50


Payment profile – processing date 06-05-09

Entitlement periods

  • 02-05-09 to 31-08-09 = 122 days
  • 01-09-09 to 05-04-10 = 217 days

Award amounts

  • CTC
  • 02-05-09 to 31-08-09 = £1,345.14
  • 01-09-09 to 05-04-10 = £1,062.38
  • Total = £2,407.52
  • WTC
  • 02-05-09 to 31-08-09 = Nil
  • 01-09-09 to 05-04-10 = Nil
  • Total = Nil

CTC daily rates

  • 02-05-09 to 31-08-09 = £9.53 + £1.50 = £11.03
  • 01-09-09 to 05-04-10 = £3.40 + £1.50 = £4.90

Claimant 2 payment profile

First entitlement period

  • On 08-05-09 (the first day payment can be made, allowing for the lead time to make a payment to a bank account) the claimant will receive a one off payment of arrears for the period from 02-05-09 to 05-05-09, 4 days at £11.03 = £44.12
  • Pay day is Friday. There are 17 Fridays in the period between 06-05-09 (the processing date) and 31-08-09 (the end of the first entitlement period).
  • The regular weekly payment is calculated as the balance due divided by the number of pay days left in the entitlement period.
  • The amount due between 06-05-09 and 31-08-09 = (122 – 4) days x £11.03 = 118 x £11.03 = £1,301.54 ÷ 17 = £76.56
  • Regular payments of £76.56 will then be scheduled for payment every Friday from 15-05-09 to 28-08-09 inclusive

Second entitlement period

  • Payment in the second entitlement period (01-09-09 to 05-04-10) is calculated as follows
  • Pay day is Friday. There are 31 Fridays in the period from 01-09-09 to 05-04-10
  • The standard weekly payment is calculated as £4.90 x 217 ÷ 31 = £1,063.30 ÷ 31 = £34.30
  • The first payment of £34.30 will be made on 04-09-09. Payments will continue to be made on Fridays. Payments will continue to be made at the same rate until the claim is renewed or finalised in May /.June 2010

Rounding difference

  • Rounding for the first entitlement period
  • Total due less arrears less regular payment =
  • £1,345.14 - £44.12 – (17 x £76.56) =
  • £1,345.14 - £44.12 - £1,301.52 = £0.50
  • Rounding for the second entitlement period
  • Total due less regular payment =
  • £1,062.38 – (31 x £34.30) =
  • £1,062.38 – £1,064.30 = £0.92

Non standard payment

  • The first payment, due on 08-05-09, will be on a non standard payment, which is the regular payment plus any rounding difference for each entitlement period, therefore
  • £76.56 + £0.50 + £0.92 = £75.14

Payment summary

Payment startType of paymentNo of paymentsAmountTotal paid
08-05-09One off1£44.12£44.12
16-05-09Non standard1£75.14£75.14
23-05-09Standard16£76.56£1,224.96
04-09-09Standard31£34.30£1,063.30
Total CTC   £2,407.52


click here to return to topCase details – revised award

  • Effective date 18-07-09
  • Notified on (processing date) 21-07-09

Claimant 1 details

  • DoB 30-04-70 (39) left employment on 18-07-09 and has applied for Income based JSA

Claimant 2 details

  • DoB 01-08-67 (41), works 10 hours a week. Main carer.

Children

  • 2 children, DoB 20-09-92 (16) and 08-07-95 (13)

Income

  • For 2009-2010 tax year (Current year) = £7,400
  • Payment frequency - weekly

Calculate the daily – revised award

  • The award calculation provides the start and end dates for each entitlement period, the number of days in each period and the total award for each tax credit for each entitlement period. From this information, the daily rate is calculated, rounded down to the nearest penny.

Entitlement 1 (02-05-09 to 18-07-09 = 78 days)

EntitlementAmount for periodDaily rate due
WTC work entitlement£720.17£9.24
CTC individual entitlement£956.28£12.26
CTC family entitlement£117.00£1.50


Entitlement period 2 (19-07-09 to 31-08-09 = 44 days)

EntitlementAmount for periodDaily rate due
CTC individual entitlement£539.44£12.26
CTC family entitlement£66.00£1.50


Entitlement period 3 (01-09-09 to 05-04-10 = 217 days)

EntitlementAmount for periodDaily rate due
CTC individual entitlement£1,330.21£6.13
CTC family entitlement£325.50£1.50


Payment profile – processing date 21-07-09

Entitlement periods

  • 02-05-09 to 18-07-09 = 78 days
  • 19-07-09 to 31-08-09 = 44 days
  • 01-09-09 to 05-04-10 = 217 days

Award amounts

  • CTC
  • 02-05-09 to 18-07-09 = £1,073.28
  • 19-07-09 to 31-08-09 = £605.44
  • 01-09-09 to 05-04-10 = £1,655.71
  • Total = £3,334.43
  • WTC
  • 02-05-09 to 18-07-09 = £720.17
  • 19-07-09 to 31-08-09 = £0.00
  • 01-09-09 to 05-04-10 = £0.00
  • Total = £720.17

Calculate underpayment or overpayment

CTC

  • Amounts paid, up to and including the processing date, are calculated as follows
08-05-09Arrears£44.12
09-05-09Non standard£75.90
16-05-09 to 18-07-09Regular – 10 weeks at £76.56£765.60 Already paid
Total paid £885.62
  • Amounts due, up to the day before processing date, are calculated as follows
  • 02-05-09 to 18-07-09 = 78 days at £13.76 = £1,073.28
  • 19-07-09 to 20-07-09 = 2 days at £13.76 = £27.52
  • Total due = £1,100.80
  • The amount of any underpayment or overpayment is the difference between the amount due and the amount paid, so
  • £1,100.80 - £885.62 = £215.18
  • Positive result, therefore underpayment

WTC

  • Amounts paid, up to and including the processing date = £0.00
  • Amounts due, up to the day before processing date = 78 x £9.24 = £720.72
  • The amount of any underpayment or overpayment is the difference between the amount due and the amount paid, so
  • £720.17 - £0.00 = £720.17
  • Positive result, therefore underpayment.

CTC daily rates

  • 02-05-09 to 18-07-09 = £12.26 + £1.50 = £13.76
  • 19-07-09 to 31-08-09 = £12.26 + £1.50 = £13.76
  • 01-09-09 to 05-04-10 = £6.13 + £1.50 = £7.63

WTC daily rates

  • 02-05-09 to 18-07-09 = £9.24

CTC rounding differences

  • 02-05-09 to 18-07-09 = £13.76 x 78 = £1,073.28
  • 19-07-09 to 31-08-09 = £13.76 x 44 = £605.44
  • 01-09-09 to 05-04-10 = £7.63 x 217 = £1,655.71
  • Total = £3,334.43
  • Difference = £3,334.43 - £3,334.43 = £0.00

Claimant 1 payment profile

First entitlement period

  • On 23-07-09, the first day payment can be made allowing for the lead time to make payment to a bank account, claimant 1 will receive a one off payment of arrears of £720.17

Note: Because there was previously no entitlement to WTC (it was wholly tapered), this payment could be labelled arrears or underpayment. The net result is the same – a single one off payment.

WTC rounding differences

  • Rounding for the first entitlement period
  • Total due less arrears less regular payment
  • £404.04 - £404.04 - £0.00 = £0.00

Second and third entitlement periods

  • There is no entitlement for WTC for the remainder of the award period.

Claimant 2 payment profile

First entitlement period

  • On 23-07-09, the first day payment can be made allowing for the lead time to make payment to a bank account, claimant 2 will receive a one off payment of £215.08 for underpayment and arrears in the first entitlement period.

Second entitlement period

  • The family pay day is Friday so the first regular payment is due on 24-07-09
  • There are 6 Fridays in the remainder of the entitlement period, 21-07-09 to 31-08-09
  • The balance of the amount due is the total amount due in the entitlement period less the arrears already paid. The arrears were for the period 19-07-09 to 20-07-09 and were included in the calculation of the underpayment
  • 19-07-2009 to 20-07-2009 = 2 days at £13.76 = £27.52
  • £605.44 - £27.52 = £577.92 ÷ 6 = £96.32
  • Regular payments of £96.32 will then be made every Friday starting on 31-07-2009 and continuing until 28-08-2009

Third entitlement period

  • Payment in the third entitlement period (01-09-2009 to 05-04-2010) is set up as follows
  • There are 31 Fridays in this period
  • The regular weekly payment is therefore £1,655.71 ÷ 31 = £53.41

Rounding difference

  • Rounding for the first entitlement period: Total due less arrears amount already paid £1,073.28 - £215.08 - £885.72 = -£27.52(arrears)

Rounding for the second entitlement period

  • Total due less arrears less regular payments £605.44 - £27.52 – (6 x £96.32) = £605.44 - £27.52 - £577.92 = £0.00

Rounding for the third entitlement period

  • Total due less arrears less regular payment £1,655.71 - £0 – (31 x £53.41) = £1,655.71 - £0 – £1,655.71 = £0.00

Non standard payment

  • The first payment, due on 24-07-2009, will be a non-standard payment made up of the regular payment plus any rounding differences. Therefore
  • £96.32 + £0.00 + £0.00 + £0.00 = £96.32

Payment summary

Payment startType of paymentNo of paymentsAmountTotal paid
08-05-2009CTC already paid 

£885.62

£885.62
23-07-2009Arrears

1

£215.08

£215.08
24-07-2009Non standard

1

£96.32

£96.32
31-07-2009Standard

5

£96.32

£481.60
04-09-2009Standard

31

£53.41

£1,655.71
Total CTC   

£3,334.33

23-07-2009Arrears

1

£720.17

£720.17
Total WTC   

£720.17

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