Tax credits deadline approaches – get your renewal in early
By 31 July most people who receive tax credits must complete and return their renewal forms, either by post, telephone or, for the first time this year, on-line. The Low Incomes Tax Reform Group (LITRG) cautions that even if you no longer want to claim or think you are no longer entitled, if you have claimed tax credits at all during the 2013/14 tax year you will still be included in the renewal exercise and will need to make sure you follow HMRC’s instructions to complete and finalise your claim.
How to renew
You should have received two forms with accompanying guidance notes:
· Form 603R (annual review), plus in most cases
· Form 603D (annual declaration).
You should read the guidance notes carefully, particularly the parts that explain what counts as income for tax credits and what deductions are allowable from income. You must then carefully check the details on the 603R review form before making your declaration by 31 July, either by post, by telephone or on-line.
· your award is exactly equal to the full family element of child tax credits,
· you have a nil award (where you are entitled to child tax credits but not receiving payments because your income is too high),
· you received income support, income-based jobseeker’s allowance, income related employment and support allowance or pension credit for the whole 2013-14 tax year, or according to HMRC data, you only have employment or occupational pension (unless you only have a temporary national insurance number or made a fresh claim in 2013-14 but did not provide your actual previous year income at the time)
you will receive only one form (603R). These are known as ‘auto renewal’ cases because you only need to contact HMRC if your circumstances have changed, or your income is no longer as shown on the form.
Commenting ahead of the deadline, LITRG Chairman Anthony Thomas said:
“Whether you are required to reply or are an auto-renewal, it is important you take any necessary action as soon as possible so that HMRC know how much to pay you for the rest of the year, or if you are no longer entitled to credits in order that they can finalise your 2013/14 claim. If HMRC have been paying you too much since the start of the tax year in April, you could have been overpaid and renewing promptly will stop any overpayment from continuing to build-up. If you have been paid too little, the sooner you renew, the sooner you will receive that underpayment.”
Notes for editors:
1. New for renewals in 2014
Use of Real Time Information
This year HMRC are pre-populating renewal pack notices sent to some employed claimants with the income figure they have on record which has been submitted via Real Time Information (RTI) by the claimant’s employer. This is intended to be helpful but it is still very important that you check the income figure shown on the notice is correct for tax credit purposes and that may be different from the income figure provided through HMRC’s RTI records. For example:
· the RTI figure might show income from more than one employer – so you will need to check that it is right by checking back through your own P60s or payslips;
· the RTI figure might not show all the deductions that can be made for tax credits, for instance the £100 disregard for maternity, paternity and adoption pay, additional pension contributions; and
· some small employers have had permission to submit their RTI submissions late which means the figure HMRC have lifted from their records for tax credit purposes might not be the correct figure and you will need to check.
If you think the income figure shown is wrong, contact the helpline and tell them what you think it should be. If HMRC refuse to change it, you should consider asking for the decision to be reviewed and maybe submitting an appeal when you get your final decision notice sent by HMRC.
Also this year, you may find that your provisional payments are altered based on RTI data sent in to HMRC by employers. Provisional payments are the tax credits you receive from 6 April at the start of the tax year until you renew and HMRC make an award based on your renewal figures. There is no right of appeal if HMRC decide to vary provisional payments but you can appeal later when your renewal award is set up, if you think the income figure is wrong.
Online renewals service
Another initiative HMRC have introduced for 2014 renewals is a new on-line renewals service. To start with, this option was only available to people who needed to reply to the renewal pack (reply-required) but had no changes or new income figure to report. But following a successful introduction, the service has been extended to cover almost all reply-required renewals, including those with changes to report. The only people not covered are a small number who receive a special form TC603D2 and are renewing more than one year. It is a quick and simple way to complete your renewal. Information is available in your renewal pack and you will need to use the 15 digit code included in the renewal paperwork.
2. The 603R guidance notes can be accessed here.
3. The 603D guidance notes can be accessed here.
4. The Low Incomes Tax Reform Group (LITRG)
LITRG is an initiative of the Chartered Institute of Taxation to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
5. The Chartered Institute of Taxation (CIOT)
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.