Renew your tax credits

14 July 2008

If you haven’t yet renewed your tax credits claim then time is ticking for you to do so. You must renew your claim by 31 July or your payments will stop.

Richard Summersgill, director of benefits and credits at HM Revenue & Customers (HMRC), says: "Renewing your tax credits claim is simple and straightforward. So, once you've received your pack, don't put it off. The sooner you renew, the sooner we can make sure that you're getting the right money."

Why do I need to review my claim?

HMRC requires people to renew their tax credit claims so it can check whether it paid you the correct amount of money last year and ensure that you are paid the right amount in the coming year.

It says it is important for people to renew their claims so it can check:

* It still has the right information about you
* Your income is still within the limits for getting tax credits
* Whether your circumstances have changed
* If you are getting all the money you are entitled to

Tax credits are awarded for a tax year (6 April to 5 April), and the amount of money you receive is based on your income from the previous tax year and your current personal circumstances.

This means that tax credit payments you get throughout the year are “provisional” until you confirm your actual income and circumstances. Then HMRC calculates exactly what you should have been paid.

If your circumstances change during the year – for example, you split up from your partner, or reduce your working hours – then HMRC requires you to inform it as soon as possible so it can recalculate what you should be getting paid. It is important that you do this or you risk being paid too much money, and having to pay it back. You may also be fined £300.

In addition, every year HMRC asks you to review your claim to check it hasn’t paid you too much or too little. If you have been overpaid then your future payments will be adjusted – although if you no longer claim tax credits you will be required to make a direct one-off payment to cover the amount.

How to renew

The deadline to renew your claim is 31 July. You should have already been sent a renewal pack, which should include a statement for your 2008/09 payments and an Annual Review which explains how to renew your tax credits.

Check all the information carefully to ensure it is correct. You must then complete the pack - being sure to declare any changes to your circumstances - and return it in the envelope provided.

You can also renew your tax credits by contacting the tax credit helpline on 0845 300 3900.

The helpline is open from 8am to 8pm seven days a week. Make sure you have all your paperwork to hand before making the call, such as payslips, your end of year P60 form and any relevant childcare details.

If you have only been sent an Annual Review notice then you don’t need to do anything unless your personal circumstances have changed, your income is no longer within the tax credit limits, or there is a mistake in the notice.

Why is it important to tell HMRC about changes?

When it comes to tax credits, it pays to be honest as payments are only backdated by three months. You therefore risk losing money if you fail to inform HMRC about changes to your personal circumstances straight away.

For example, if you have a baby on 12 June but don’t inform the HMRC until 12 October then your payments will only be backdated to 12 July.

If you are overpaid then HMRC will demand that you repay the money, either directly or through future tax credits. It may also charge you a penalty of £300.

Changes you must inform HMRC of include:

* If you first claimed tax credits as an individual but are now married, in a civil partnership or living with your partner. Or, if you first claimed tax credits as part of a couple but are now separated permanently or your partner has died.

* If you or your partner leave the UK for good, or go abroad for more than eight weeks (12 weeks if you or a family member is being treated for an illness or a relative has died), or if you lose your right to reside in the UK.

* If you stop working, you are on strike for more than 10 working days in a row or your working hours change. Or if you move job, or your income changes.

* If your children are taken into care or with a foster family, or are sentenced to four months or more in custody/detention. Or if you have a baby, foster or adopt a child.

* If your child leaves full-time education or approved training up to 31 August after the 16th birthday, starts training as part of their job, gets a paid job of more than 24 hours a week, or starts to claim income support, incapacity benefit, jobseekers allowance or tax credits.

* If your childcare costs go down by more than £10 a week for more than four months in a row, or the person providing your childcare is no longer registered to provide this service.

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