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HMRC internal manual

Claimant Compliance Manual

Overview: Entitlement Year


Entitlement to tax credits is based on the individual’s or couple’s annual income, and is reviewed on an annual basis. The tax credits entitlement year runs along side the tax year, from April to April. The income used to calculate the amount of the award is, in the first place, that for the previous year, or the previous year minus one. After the end of the year the amount of the award is finalised on the basis of the actual income for the year. All reductions in income will result in additional payments of tax credits, but any rises will only be taken into account to the extent that they exceed a pre-determined threshold.