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Tax Credit renewals


Lucy Cochrane

Lucy Cochrane

Lucy Cochrane

If you are working and currently receiving Child and/or Working Tax Credit, you should have received a reminder letter by now informing you that your renewal form will be sent out shortly.

You should also have received your renewal pack by 30 June and this needs to be returned to HMRC by 31st July otherwise your payments will stop.

Usually tax credits are awarded for a complete tax year so if you are getting tax credits at the end of a tax year you will receive provisional payments of tax credits after 6 April until a decision about whether to make a new award for 2011-12 can be made. This gives you time to provide the information that HMRC needs to make a decision about your entitlement in the new tax year and prevents a break in the claim.

You are required to confirm that all the details on which their award of tax credits was based are correct, or if the details are not correct to inform HMRC. Examples include if the claim is for a single person or a couple, hours of work, child care costs if applicable and household income. If you have confirmed the necessary details and returned the declaration notice by the date specified on the notice your award for the current tax year will be made effective. This can be done either by completing the declaration form and returning by post or the information can be given via the Tax Credits Helpline.

In some cases, for example, if you are self-employed, it may not be possible to provide all income details by the date specified in their final notice. As long as an estimate for the previous year is provided by this date, your tax credits award will continue. However, you will have to provide a final income figure by 31 January of the following year.

You should keep HMRC up to date with any changes which may affect your award and it is better to do this as soon as the information becomes available to you.

Since April 2011 in some cases, your reminder letter will state that your claim will lapse unless you contact HMRC because your income is too high. This will affect people who are affected by the cuts to the tax credit system or people who have been receiving a ‘nil award’. It is important that you consider your options as you may have an unexpected drop in your income throughout the year therefore it may be worth staying in the system even with a nil award should you need to claim.

The recent changes to the tax credits system have meant that some people on higher incomes are no longer entitled to working tax credits. The changes have also affected most people who use childcare and people who work and earn more than £6,420 per year.

Further information on tax credits and renewals is available from your local CAB, from the Tax Credit Helpline on 0845 300 3900 or from the HMRC website at www.hmrc.gov.uk.

For more information on leaving the tax credits system visit the Low Income Tax Reform Group website www.litrg.org.uk