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Tax Credits affect on other Benefits

Discover how tax credits and other benefits you claim affect each other. They will not usually affect Child Benefit but they do have an impact on claims for Housing Benefit.

EFFECT ON PAYMENTS: As a rule, once you start getting tax credits it is going to reduce other benefit payments, such as:

You cannot claim Tax-Free Childcare or Universal Credit and get tax credits at the same time.

Note: The office that sends the benefit payments can help you work out exactly how tax credits affect benefits.

Extra Help available with Tax Credits

You may qualify for extra support and other welfare benefits if you already get tax credits. Check to see if you can get help with:

Often, you will need to prove that you are receiving tax credits to get the extra financial help. You can use the Tax Credits award notice as proof.

You can also show the TC 603 R form if you qualify for automatic renewal. The Tax Credit Helpline can give you further advice if you do not have these documents.

Other Benefits that affect Tax Credits

As a rule, your income will determine whether you can get tax credits and what amount you will qualify for. But, several welfare benefits also count towards your income. This can include certain kinds of foreign benefits.

Disability Benefits

Extra tax credits are available for many families if you or your child get certain disability benefits.

Universal Credit

If you get tax credits they are going to stop altogether if you start getting Universal Credit.

Note: The benefits calculator is the government’s online adviser for finding out what benefits you could get.

Tax Credits Checks 2022

This section explains the procedure for tax credits checks. Find out what you need to send and what happens to a claim. You can also find out the deadline for responding to the Tax Credit Office.

You would receive a letter from the Tax Credit Office if they want to check your tax credits. You must reply with the information they have asked for by their response deadline.

In most cases, tax credits checks get carried out to ensure you get the right amount of benefit.

  1. The letter you receive explains the reason for the tax credits checks and how you must respond.
  2. The letter will show the deadline for your reply. Be sure you send the information back to them before the deadline expires. You can now reply to a HMRC tax credits check (TC122) online as well as using the reply form.
  3. You will get another letter from the Tax Credit Office clarifying the results of the HMRC tax credit check.

The check can request information about your personal circumstances. This includes your employment details and your income. They can also ask your employer or childcare provider for extra information.

As a rule you will get back any original documents you send to them. The exception could be if they believe the documents are not genuine or not do not belong to you.

Results of a Tax Credits Check

Several different things can happen following the results of a tax credits check. In most cases, your tax credits will either be:

  • Increased: If they determine you are not receiving enough tax credits.
  • Reduced: If they determine your tax credits are too high.
  • Stopped: If they determine that you should not be getting any tax credit payment at all.

Note: You will have to repay tax credits overpayments if you should not have claimed for them.

Tax Credits Penalties

In some cases, you may also receive a fixed-rate penalty if you:

  • Fail to send the information they ask you for.
  • Acted ‘carelessly’ or ‘dishonestly’ during your claim or during the renewal.

Note: Contact the Tax Credit Office if you have difficulty sending what they ask for. Your payments may stop if not.

How Tax Credits affect other Benefits in the United Kingdom