Act fast or lose your tax credits

The Low Incomes Tax Reform Group (LITRG) is urging people to contact HMRC urgently if they have missed the tax credits renewals deadline.

For those who were told to contact HMRC to renew their tax credits, the 31 July deadline was crucial. If someone missed the deadline, HMRC will stop their tax credit payments and send them a Statement of Account. This will tell them that HMRC have stopped the payments and also ask for all of the tax credits paid since the start of 2017/18 tax year (that is, from 6 April 2017) to be paid back.1

Victoria Todd, Senior Technical Manager at LITRG, said:

“We urge people to contact HMRC urgently to get their payments reinstated from 6 April 2017.

“Provided they contact HMRC within 30 days of the date on their Statement of Account and renew, the tax authority will process the renewal and reinstate their 2017/18 claim back to 6 April 2017.

“If someone is self-employed and does not yet have final details for the last tax year, they must give an estimate and then either confirm the estimate, or file actual figures, by 31 January 2018.”

If someone misses this 30-day deadline, they can only renew and secure their annual entitlement for 2017/18 if they complete their renewal by 31 January 2018 and can satisfy HMRC that they have ‘good cause’ for missing both the 31 July deadline and the extra 30-day deadline.

Victoria Todd added:

“If someone misses the extra 30-day deadline and does not satisfy HMRC that they have ‘good cause’ for being late, HMRC will ask them to repay all tax credit payments made to them from the start of the tax year. They will then need to make a fresh tax credits claim if they want to carry on receiving tax credits, but that will only be backdated a maximum of 31 days.”

Things are more complicated for claimants who live in a universal credit full service area where it may be no longer possible to make a new claim for tax credits.2 LITRG recommends that anyone in these areas who misses the 30-day extension period and is concerned that they can no longer claim tax credits should contact HMRC or a local welfare rights specialist as soon as possible before making a claim for universal credit.3

Tax credits are paid to people who are responsible for children or young people and working people on low incomes, whether or not they have responsibility for a child/young person, and are based on household income and circumstances. Treasury figures show that 4.28 million families benefited from tax credits in 2015-16.4 Last year 410,000 claimants had their payments stopped or altered because they missed the renewals deadline.5

If someone has missed the deadline, telephone the Tax Credits helpline on 0345 300 3900 (the Textphone number, for those with impaired hearing or speech, is 0345 300 3909).

Notes for editors

1.       For the 2016/17 renewals cycle, claimants had until 31 July 2017 to renew their tax credits awards. This means that claimants who received two forms – one with a red line across it – are told to contact HMRC to renew by 31 July 2017 otherwise their claim would not be renewed and their payments would stop. Each year, tax credits claimants receive a renewal pack from HMRC. The renewals process does two things: firstly, it finalises the claim for the tax year that has just ended (2016/17) and secondly it acts as a claim for the new tax year (2017/18).
Even if you no longer want to claim or think you are no longer entitled, if you claimed tax credits at all during the 2016/17 tax year you should have been included in the renewal exercise to finalise your claim for that year.

2.       In some postcode areas, it is no longer possible for some people to make a new claim for tax credits as they have been replaced by universal credit. You can find out if your area is covered by the full universal credit service using our postcode checker

3.       If you live in an area where the full service of universal credit is in place you may not be able to make a new claim for tax credits. In those areas, providing you renew within 30 days of the statement of account, you will be able to have your claim for tax credits accepted. However, if you miss that 30 day extension period and live in one of the universal credit full service areas, then technically you may need to claim universal credit instead. The ‘good cause’ extension does not apply in such cases under the legislation although our understanding is that HMRC may be willing to reinstate a tax credits claim where ‘good cause’ is accepted for the late renewal. 

4.       Treasury Child and Working Tax Credits Statistics, UK, p.8, see here.

5.       HMRC press release ‘Tax credit renewal – one week to go’, see here.

6.       Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) 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.

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. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 (Out of hours contact: George Crozier, 07740 477 374)