A change of circumstances may affect your Working Tax Credits. Almost all changes in family and work life during the year (e.g. a change of job) will affect your award for tax credits.
You must report certain changes within thirty (30) days to HM Revenue and Customs or the Tax Credits Office. In some cases, tax credits will go up, go down, or the payments may stop altogether.
You must also report any personal and circumstantial changes as soon as possible, such as changing bank details or if you have a change of address.
You can make some changes online yourself. You can also phone or write to HMRC for help with tax credits. Either way, it is best to prepare as much information as possible before you give notification of the changes.
You may be wondering:
So, why do you need to report a tax credits change of circumstances to the Tax Credit Office and how long does it take to make the changes?
First of all, it keeps their records current and you avoid receiving a benefit overpayment. This happens most often if you fail to report an increase in your income soon enough.
Important: A help guide explaining how to report changes that affect your tax credits is also available in Welsh language 'Rhoi gwybod am newidiadau sy’n effeithio ar eich credydau treth' (Cymraeg).
You would need to notify HM Revenue and Customs (HMRC) 'without delay' about certain changes that affect tax credits, such as if your.
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:
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:
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.
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.
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:
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.
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.
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:
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:
There are several ways to prove your identity using one of the following documents. You can use your:
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.
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).
There are several reasons why your tax credits change. So for example, your payments may increase (go up) if:
But, your payments may decrease (go down) or stop altogether, if:
You should also tell HM Revenue and Customs (HMRC) if you change:
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
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.
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.
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.
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:
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.
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.
How to Report Changes that Affect Tax Credits in United Kingdom