Several IPs I have spoken to regard this as normal income, and just take it into account when conducting income reviews.
However, I suppose it could be regarded as a windfall, in which case you'd typically have to pay 50% into the IVA (subject to your own proposal and modifications).
You really need to check with your IP to find out about your own terms and their interpretation of whether a tax rebate is "income" or a "windfall".
I would look at the timing of the rebate. If it relates to a period pre IVA it would be deemed a windfall but post IVA rebates are normally treated as part of the essential cashflow.
Michael Peoples wrote:
I would look at the timing of the rebate. If it relates to a period pre IVA it would be deemed a windfall but post IVA rebates are normally treated as part of the essential cashflow.
I've heard this reasoning before, and it definitely rings of common sense.
Definitely talk to your IP about this though, Kitty33!
I had a £400 tax rebate 1 year into my IVA. When I called Grant Thornton to advise them of this they told me that I could keep it all. I was on a higher tax code for 8 months. My IVA had started though. I did question whether this was classed as a windfall and the lady in customer services told me that "well you have had to go without whilst you were paying the extra tax" not sure if your situation was the same as mine but that is what I was told.
Kitty33 - as your IVA was only accepted last week I imagine that your tax rebate relates to the period before the IVA, in which case I'd probably regard it as a windfall. But check with your IP.
LizWalker - I'd probably agree with Grant Thornton in that case. If the tax was taken while you were in the IVA, then the rebate should have been part of your normal income.
I believe that if your income was calculated on the net figure with a wrong tax code, the rebate should have been treated as a windfall and your monthly payments increased. However, given that the windfall was under £500 and the increase in net pay is likely to be quite low realistically I would agree with GT.
Michael has provided the correct answer. There is no need for IP discretion with regard to tax rebates - it is very clear how they should be treated within the terms of the IVA.
