Tax credits

You can order a tax credits claim pack from the tax credits helpline on 0845 300 3900 or textphone 0845 300 3909 (open 8am to 8pm every day except Christmas Day, Boxing Day and New Year’s Day). If you claim benefits such as Income Support or Jobseeker’s Allowance, you can ask your Jobcentre Plus for help in claiming tax credits.

The tax credits claim pack includes notes to help you complete the claim form. If you need more help or advice with the form, you can call the tax credits helpline.

When you complete the form, you’ll need to provide the following information:

• Your national insurance number (and that of your partner if you have one). If you can’t produce your national insurance number, you’ll need to give HMRC enough information for the national insurance number to be traced or a number to be allocated to you. This applies unless HMRC accepts that there’s a reasonable excuse for you not to do so.
• The names and ages of any children you’re responsible for.
• The taxable income that you received in the previous tax year, and details of your employment.
• If you pay for childcare, details of your childcare provider and average weekly childcare costs.

You should be sent an ‘award notice’ within 30days of HMRC receiving your form. This explains your entitlement to tax credits, or give reasons why your claim has not been successful. The notice will show which types of tax credit you’ll get, how much you’ll receive, and the information HMRC has used to make it's decision.

This decision is called an initial or provisional decision, and it’s not final. At the end of the tax year, HMRC will review your claim (see Renewal claims, below), and finalise your tax credit award. If your circumstances have changed during the tax year, HMRC may adjust the amount of tax credits you’re entitled to. Some changes in your circumstances can mean that you’re no longer entitled to tax credits at all. If you’ve been overpaid, HMRC can require you to pay back money that you shouldn't have had. See the overpayments section below for more details.

Keep your award notice safe because you may need it later if there are any disputes about your claim. It’s also important to check that the award notice reflects the information you gave in your claim, and that there’s nothing missing. If you spot any problems, contact HMRC. This will avoid overpayments of tax credits, which may be recovered from you.

If there’s a change in your circumstances it’s important that you tell HMRC within the correct time limits.

Your tax credit award could possibly be subject to an in-year adjustment. This may happen when HMRC thinks you’ll be overpaid by the end of the tax year if they don’t alter your payment. If the reduction in your tax credit causes you financial hardship, it’s possible to ask for additional payments of tax credit until the end of the tax year. However, these will be taken into account as overpayments at the end of the tax year, and you can be asked to pay them back.

You can challenge tax credit decisions and you have a right of appeal against many of them. However, there is no right of appeal against a decision by HMRC to recover an overpayment from you.

You may wish to seek independent help and advice in order to deal with problems or to challenge decisions. For sources of advice, see the Citizens Advice Bureau website and other links (box, above right).

When you claim tax credits, you’re sent an award notice. This tells you when your first payment will be and when further payments will be made. If you get your first payment before you receive the award notice, check the date that payment is due.

Tax credits are paid into a bank, building society, National Savings or Post Office card account. You’ll be asked to nominate an account when you make your claim. The account must be in your name, your partner’s name, held jointly with your partner or in the name of someone authorised to act for you (either solely in their name or jointly with you).

If you don’t provide these account details, your claim could stop until you provide the information. If you’re having problems opening an account or you’re changing accounts, contact HMRC.

There are some accounts, such as those held in the name of a child and some mortgage and business accounts, that you cannot use. See the HMRC website for a list of accounts that you can use for tax credit payments. If you change the account into which you want to be paid, inform HMRC.

You're usually given the choice of being paid weekly or every four weeks. If the amount of tax credit you're entitled to is very small (say under £2 a week) you may be paid in a lump sum. If your entitlement is under £26 a year, you won't be paid at all.

You need to renew your tax credit claim each year. This renewal process also enables HMRC to review your claim for the last tax year and make sure that you were paid the right amount of tax credits.

Between the end of the tax year (early April) and the following July, you’ll be sent a renewal pack. You’ll get one of these even if HMRC decided your income was too high for you to receive tax credits (this is called a ‘nil award’).

The renewal pack includes a form which asks you to confirm your circumstances (including your income) during the year. This will help HMRC to decide whether your award has been correct or whether you’ve been underpaid (in which case they can pay you extra) or you’ve been paid too much (in which case they can recover the overpayment). The information you give on the form will also set up your claim for the new tax year.

The deadline for returning the form to HMRC is July 31. If you don’t return the form by this date, your tax credit award will stop.

You can find advice on renewing your tax credits claim on the HMRC website.

It’s a good idea to return the form as soon as you can. This will ensure that HMRC has correct information about your circumstances and any possible changes during the last tax year, and that you receive the right amount of payment.

While you’re completing the form, you’ll continue to get tax credit payments, called provisional payments. However, these are based on the information you provided in the last tax year. If your circumstances have changed, your provisional payments may be too high. In this case, you can be asked to pay back money that you shouldn’t have received.

If you don’t return the form by July 31, you’ll stop getting tax credits. You’ll also normally have to pay back any provisional tax credit payments you’ve received since the end of the last tax year.

It's important to fill in your forms correctly and completely when making a claim. Contact HMRC as soon as possible if you've forgotten to include something in your claim, you have additional information that you need to send, or your situation changes. HMRC will try to include this new information from the start of your claim, otherwise it will make changes to the initial decision and will send you a new notification showing the changes in your entitlement.

HMRC can make further enquiries about your entitlement during the lifetime of your tax credit award (and sometimes after the final award has been made), and can ask you for further information.

If HMRC thinks you've deliberately provided wrong information or haven't sent information when it was requested, they can impose penalties on you.

Failure to comply

If HMRC asks you for additional information and you don't supply it, this could be seen as failure to comply with requirements. The penalty for this is up to £300, but there’s a possible additional penalty of up to £60 a day.

Some changes in your circumstances can affect your entitlement to tax credits, and must be reported to HMRC. If you should have reported a change of circumstance but didn't, this could also be a failure to comply with requirements. Some changes (for instance, if you and your partner separate or you move in with a new partner when you've been claiming as a single person) must be reported within a month. If you take longer than this and don't have a good reason for the delay, you could incur a penalty of up to £300.

Incorrect statements

If you've made a mistake or forgotten to include something in your claim, contact HMRC as soon as you can. You shouldn't incur a penalty simply because you've made a mistake. However, if you've been 'negligent' (for instance, you haven't taken enough trouble to give correct details), there's a possible penalty of up to £3,000.

If you've deliberately (fraudulently) given wrong information, the possible penalty is up to £3,000.

If you've claimed tax credit with your partner, you're both responsible for giving correct information. If you incur a penalty, you can be charged as a couple. However, if only one of you could possibly have known the relevant information, only that person will be penalised.

If you’re penalised

If you're notified of a penalty, you can contact HMRC to discuss it and to request that they reconsider their decision. They'll seek to agree the amount of the penalty with you, and when and how you should pay it.

You may be charged interest if you pay a penalty late. If you refuse to pay, HMRC may take legal action against you.

You have a right of appeal against a decision to impose a penalty. Penalties for failure to provide information and evidence must always be referred to an appeal tribunal by HMRC. If the tribunal decides the penalty should be applied, you may be able to appeal this decision to an upper tribunal. If this happens, you should seek help and advice on how to do so.