Tax Credits Change of Circumstances

Changes You Must Report Straight Away

You would need to notify HM Revenue and Customs (HMRC) 'without delay' about certain changes that affect tax credits, such as if your.

• Child stops living with you and leaves home (moves out or is taken into care).
• Child leaves approved education or training or careers service after they reach sixteen (16) years old.
• Child is taken into custody.
• Child or your partner dies (unless you already used the Tell Us Once service).
• Costs for childcare drop by £10 or more a week, stop altogether (fall to zero), or you start getting financial help with them.
• Childcare provider is not registered or approved any longer.
• Living circumstances change (examples include):
  • You start or end a relationship.
  • You form a civil partnership or get married.
  • You move in to live with a new partner.
  • Permanently separate or you are getting a divorce.
• Working hours drop below (or rise above) the minimum required to qualify for Working Tax Credit.
• Working hours drop below thirty (30) hours per week (combined amount for couples with children).

Note: You should make a new claim for tax credits if you start or end a relationship (or your partner dies).

You must also inform the Tax Credits Office (HMRC) straight away if you:

• Go abroad (leave the United Kingdom) for eight (8) weeks or longer (12 weeks due to an illness or bereavement overseas).
• Are ill or in hospital for more than 28 weeks (as an adult).
• Receive a prison sentence.
• Go overseas permanently or lose your right to stay (reside) in the United Kingdom.
• Start working for less than sixteen (16) hours while claiming childcare costs (some exceptions apply).

What if the Hours You Work Fall Due to COVID-19?

If a fall in your normal working hours is because of coronavirus (COVID-19), there is no need to report the change (e.g. you are on furlough).

HM Revenue and Customs (HMRC) will treat this situation as though you are working your usual hours until the Coronavirus Job Retention Scheme (CJRS) ends.

But, you would need to tell HMRC if you:

• Get made redundant.
• Lose your job.
• Stop trading as a self-employed person.

Deadline for Reporting Changes

You would need to report most of the changes that affect your tax credits within one (1) month of when they happened. Doing so means you will reduce the amount you get overpaid.

Changing Estimated Income

You may have estimated your income at the time you renewed your tax credits (e.g. as a self-employed worker). If so, you should inform your actual income to HM Revenue and Customs (HMRC) by the 31st of January deadline.

Failing to report a change within the one month deadline can result in a fine up to £300. Moreover, the penalty can increase to £3,000 for 'intentionally' giving false information.

List of Other Changes You Should Report

Not all tax credit change of circumstances have a one month deadline for reporting. But, failing to notify HMRC about some circumstantial changes could result in an overpayment and affect other benefits, such as if:

• Your income changes (report it without delay if it increases or decreases by at least £2,500).
• Your working hours increase to thirty (30) hours or more per week (combined for a couple with children).
• You have a baby or you become responsible for someone else's child.
• You start receiving, or you stop getting, benefits (or your entitlement to benefits changes).
• You, or a member of your family, start or you stop getting a disability benefit (e.g. Disability Living Allowance or Personal Independence Payments).
• You receive a certification that your child is blind (or they are no longer certified as blind).
• You change your childcare provider or you start paying for registered or approved childcare.
• You stop receiving financial help with the costs of childcare.

As a rule, tax credit payments cannot be backdated for more than one month. So, you should report these kinds of changes as soon as they happen (not the end of the year) to avoid losing money you are entitled to.

Critical Workers and Reporting Changes

HMRC will backdate any increase in tax credits for a period of up to three (3) months for critical workers who report a change in circumstances.

But, once the Coronavirus Job Retention Scheme (CJRS) closes, the process of backdating returns to one (1) month.

How to Report a Changes in Circumstance

The easiest way to report a tax credits change is online via the GOV.UK website. But, the online service does not allow you to report all types of changes, such as:

• The bank account that you want to use.
• Most changes that have not yet happened (excludes a change to existing childcare costs which is up to one week in advance).
• The frequency of your payments.

Important: You will be able to report these particular changes (and others) by telephone or by postal methods instead. See the 'tax credits general enquiries' section for further details.

You will need to provide some basic information the first time you sign in to the online service, such as:

• Government Gateway user ID and strong password (you can create an ID when you use the service).
• Your permanent National Insurance number (NIno).

There are several ways to prove your identity using one of the following documents. You can use your:

• Bank account details
• P60
• Recent payslips
• Passport number and expiry date

Signing in activates your personal tax account so you will be able to use this service to check and manage your HMRC records as well.

Tax Credits Overpayment Advice

You can also manage tax credits online to report changes to your circumstances. You should include the old details with the new details (e.g. PAYE reference numbers, employment change dates, and the names of employers).

Why Do Your Tax Credits Change?

There are several reasons why your tax credits change. So for example, your payments may increase (go up) if:

• Your benefits go down or they stop altogether.
• You start receiving the PIP benefit, Disability Living Allowance, or other disability benefits for yourself or for a child you are responsible for.
• You have a child.
• Your childcare costs increase (go up).
• Your income drops by more than £2,500.

But, your payments may decrease (go down) or stop altogether, if:

• Your income increases by more than £2,500 (report it without delay to avoid overpayments).
• You did not renew your tax credits claim.
• Your award notice shows a tax credit overpayment.
• You stop receiving the PIP benefit, Disability Living Allowance, or other disability benefits for yourself or for a child you are responsible for.
• You or your partner qualify for and start claiming Universal Credit.
• Your childcare costs increase (go up).
• Your child is age 16 to 19 years old and you did not inform the Tax Office that they are in approved education or training.

Change Bank Details for Tax Credits

You should also tell HM Revenue and Customs (HMRC) if you change:

• Address (tell HMRC after you have moved to the new address)
• Bank account details (you can report a change to your bank details up to 30 days beforehand)
• Gender (read how to get a gender recognition certificate)
• Your childcare provider

HMRC Tax Credits Change Bank Details or Address

Tax Credits: General Enquiries
Telephone: 0345 300 3900
Textphone: 0345 300 3909
Outside UK: +44 2890 538 192
Call charges to 0345 numbers.

HMRC Tax Credit Office
HM Revenue and Customs
Tax Credit Office
BX9 1ER
United Kingdom

Note: The short video by HMRC [2:15 seconds] explains what happens when they make routine checks on tax credits awards and how you should respond if they send you a letter.

Changes to Your Annual Income

As a rule, HMRC will base your tax credit award on income from the previous year. But, it will count in the current tax year if your income falls by more than £2,500.

If you report an estimate of lower income straight away, it will often result in an increase in tax credit payments. But, if you wait until HMRC conduct their end of year review you would get any arrears owed as a lump sum.

It is not uncommon for an annual income to rise by more than £2,500. In this case, HMRC will base the award on income for the current year. You can choose to have the award reassessed during the current year instead of waiting for the end of year reconciliation.

Keep in mind that waiting until the end of the tax year means you may get an overpayment of tax credits.

Note: It may be easier to consider the system is paying out a provisional tax credit during the year. So, there would be a reconciliation of the amount they should have paid, and the amount they actually paid, at the end of the tax year.

RELATED HELP GUIDES

What are Tax Credits and How do they Work?

There are two categories of tax credits - Working Tax Credit (WTC) and Child Tax Credits (CTC). The main section will help you to determine whether you qualify to claim and when to renew.

How Do I Change My Bank Account Details for Tax Credits?

There are a few things you need to check before you change bank details for tax credits using the online form. First, make sure the bank account registers to one of the following names:

• Your own name, your partner's name, or you and your partner's joint names (or)
• The name of a person acting on your behalf, or both your own name and the name of a person acting on your behalf.

Important: Some accounts are unsuitable for receiving benefit payments (e.g. Child Trust Fund account or Individual Savings Account (e.g. Junior ISA).

Why Has My Child Tax Credit Gone Down?

The government is changing the way people pay taxes and receive them back in credits. They increased the National Living Wage and raised the income tax threshold. Extra free childcare may compensate some parents for the unwelcome welfare cuts.

What Support is Available for Families with Children?

Check what entitlements and assistance families can claim for. The section explains how to get financial help if you have children with information for pregnant mothers and those who already have a child.