Step four: work out your income

How your student income is calculated for tax credits is covered in Chapter 23. A CTC award for a tax year is usually based on your income in the previous tax year. However, if you expect your income over the current tax year to be more than £2,500 lower or higher than the previous year, tell HMRC and it reassesses your tax credits. Your award is then based on the current year’s income plus £2,500 if it is more than £2,500 lower than in the previous year, or based on the current year’s income minus £2,500 if it is more than £2,500 higher than the previous year’s award.