Corporate report

Issue briefing: tax credits renewals

Updated 24 July 2014

HMRC pays tax credits to 4.61* million households across the UK. We work out the amount of money a household receives based on the information they give us. Claimants provide us with information on their household circumstances and income at the beginning of the tax year and they must report key changes to us during the year. This briefing provides information on how people should report changes in their circumstances and the importance of renewing their tax credits.

1. Tax credits

There are two types of tax credits and people can claim either, or both, depending on their circumstances:

• Child Tax Credit supports families with children, regardless of whether they are in work.

• Working Tax Credit is for working people on a low income, regardless of whether they are an employee or self-employed. Those who have children may also get help with childcare costs.

2. Reporting changes

The most common changes that affect tax credits payments are those involving income, childcare, working hours and the number of people in a household – particularly if the claimant begins living with a partner. Claimants have a legal responsibility to report certain changes within one month of the date when the change happened. The type of changes they should report and when and how they should report them can be found on the changes that affect your tax credits page.

3. Renewing tax credits

Between April and June each year we send claimants an annual renewal pack, which includes a detailed breakdown of household income, circumstances and payments for the previous tax year. Each renewal pack will tell the claimant precisely what to do. Claimants will receive either an:

• A4 white envelope – they must carefully check their annual review notice and renew their claim by completing their annual declaration by 31 July. In renewing, claimants must tell us about any changes to their circumstances. This year customers can complete their annual declaration and tell us about changes in their circumstances online, either on the tax credits web pages on GOV.UK or via the HMRC mobile app (customers who receive an annual declaration with the code ‘TC 603 D 2’ or who need to change their bank details must renew by phone or post).

• A5 brown envelope – they must carefully check their annual review notice and only contact us if there are any corrections or changes to their household circumstances. Otherwise, they do not need to contact us because their claim will be renewed automatically.

Many claimants leave it until close to the July deadline to renew their tax credits and our phone lines can get extremely busy. In 2013, nearly three million calls were made to the Tax Credit Helpline in last two days before the deadline. The high level of demand puts increased pressure on our phone lines and this year we are sending claimants an SMS text message to remind them to renew before the deadline. We advise claimants to renew early to save the frustration of waiting on the phone, or use alternatives: such as posting their renewal or using the online service – which is available 24 hours a day, seven days a week.

4. Checking claims

Claimants and their partner (if applicable) are responsible for checking and ensuring we hold correct and up-to-date information about their circumstances. They are at significant risk of an underpayment or overpayment if they fail to report any changes in their circumstances within the specified timeframe.

We check the information that claimants provide. Claimants may be given 30 days to supply evidence that supports their claim. If they do not provide the evidence required, their payments will stop.

5. Overpayments

If the information we hold is not correct or up to date, claimants may be paid too much money, which results in an overpayment that they will have to pay back to HMRC. Claimants can take steps to avoid building up a debt from overpayments by:: swiftly reporting any changes to their circumstances or corrections to their information carefully checking any information we send them about their claim
telling us about any payments they receive that do not match the amount on their tax credits award notice renewing their tax credits claim before 31 July, if required to do so.

We collect tax credits overpayments by making deductions from ongoing claims, or directly from the claimant where that is not possible. You can find more information on the tax credits overpayments page.

6. Fraud

While the vast majority of people are honest and only claim what is rightfully theirs, there is a minority who deliberately attempt to defraud the benefit system. We are committed to targeting fraud in all tax credits claims and there are strict rules in place to protect these payments. Those who make false claims do so at the risk of investigation, prosecution and a criminal record.

7. To find out more

More information can be found on the tax credits pages of GOV.UK.

*Source: Child and Working Tax Credits Statistics, Finalised Annual Awards 2012-13