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HMRC internal manual

Claimant Compliance Manual

Overview: Finalising Earnings for Employed and Self-employed

Employees will be able to base both their initial and final figures on the P60 they receive from their employers. Self-employed customers will use the figure of income on the relevant SA return. The time scales will normally be different for the employed and self-employed, because of the longer time allowed to make a return of business profits.

For example, the amount of tax credits to which an employed customer is entitled for 2011/12 is based initially on their income for 2010/11. Most employed customers will be able to supply the actual figure of income when we ask them to do so in July 2012.

A self-employed customer would base their initial 2011/12 claim on the return for 2009/10, due to be filed by 31/01/2011. There will usually be a longer interval before the amount of the award can be finally determined, as the return which includes income for 2011/12 will not become due until 31/01/2013.

As Example 6 shows, awards to self-employed customers will generally take six months longer than those of the employed to finalise.

Example 6:

Nick, a self-employed chauffeur, has been claiming tax credits since April 2003. His 2010/11 award was based on his income for 2009/10 - PY, He will be asked to provide details of his 2010/11 income by 31/07/2011. If he cannot provide actual income, he should give us an estimate of his income by 31/07/2011 and provide actual income figures, if different by 31/01/2012. At this date he should have filed his 2010/11 SA return (filing date 31/01/2012) so he will be able to use the figure of income on the return to finalise his NTC entitlement.