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Tax Credits

How to claim, renew or appeal
Stacks of coins

Tax credits can mean a payout, potentially in the £1,000s, even after recent cuts. But you MUST renew them each year or future payments could stop and past payments go wrong.

Tax credits can mean a payout, potentially in the £1,000s, even after recent cuts. But you MUST renew them each year or future payments could stop and past payments go wrong.

It's also important that you keep the Tax Credits helpline up to date with any change in your circumstances. If you don't, you may end up having to repay overpayments in the future.

The five facts everyone should know

Before we get to the nitty-gritty, if you only remember five things about this, make them...

  1. Tax credits can be worth £1,000s a year

    While the system’s over-complex, many people are £1,000s a year better off due to tax credits. The average payout for childcare alone is £3,000+. So always do an eligibility check.

  2. You can lose £1,000s if you don’t renew properly

    If you get tax credits, then you’ll be sent a renewal pack each year between April and July. Some just need checking, others signing and sending back. Don’t miss it – it can mean your payments stop completely and you’re asked to repay all the money paid since April. See the full Renewal Help section for how to protect yourself.

  3. Tax credits aren’t just for those with kids

    There are two types of tax credits, the child tax credit and the working tax credit. The first, of course, is only available to those with kids. Eligibility depends on how many children you have (families with four kids can earn up to around £45,000). Working tax credit supports those on low incomes in work and you don’t need children to get it. See the What Tax Credits Are Available? section.

  4. Being overpaid may sound good but it’s a nightmare

    Getting more than you’re entitled to may sound good, but for most it's a nightmare that should be avoided. If you are overpaid, at some stage you may have to pay back all the money they’ve given you. This may be taken from your future tax credits, meaning you’ll have much less to live on. See the Overpayment Help section for more.

  5. Not reporting changes can cost you a fortune

    If there’s one thing every tax credit recipient should know, it's if your circumstances change, then TELL ’EM, TELL ‘EM, TELL ‘EM! Better still, note down exactly when and what you told them too. If you’ve correctly informed them and they overpay you – you won’t have to give the money back. But if you haven’t told them, you will. See the Changed Circumstances section to check what you need to tell them.

What are tax credits?

Tax credits are payouts made regularly by the state into bank accounts to support those with children or in work but with a low income. They're paid via the tax office and anyone aged over 16 who normally lives in the UK can apply to get them.

There are two types of tax credits. You can be eligible for none, one or both:

Child Tax Credits - Eligibility:

Anyone with children, whether working or not, could be eligible

Working Tax Credits - Eligibility:

Anyone who works, whether they've got kids or not, could be eligible

The amount you can get depends on a number of factors:

  • Your income.

    The more you earn, the less you're likely to get (see what counts as income?)

  • Single or couple?

    Couples need to make joint claims based on household income (see what counts as a couple?).

  • Number of children.

    The more kids you have, the more you could get.

  • Working hours.

    Work over the minimum weekly hours for your circumstances to be eligible. Overtime only counts if you work the hours regularly.

  • If you've a disability.

    More's available for those getting some disability or sickness benefits.

For more on the specific entitlements and exactly how much you can get, see the Child Tax Credit and Working Tax Credit sections.

Tell them if your circumstances change

Happy family with tax creditsIt's crucial that if anything changes which affects tax credits, you tell the tax credit office as soon as possible, even if you're not obliged to, otherwise you may find you owe them money.

Sometimes the tax credits office may contact you to check if your circumstances have changed. This is perfectly normal. It's not trying to catch you out, but it may be able to solve any issues before they happen.

This happens because payments are ESTIMATED from last year's earnings, but cover this year's working hours. So if things change, and you don't tell them, you'll be under- or overpaid.

The most important thing we can yell out to everyone: if your circumstances have changed...

TELL 'EM, TELL 'EM, TELL 'EM!

Don't feel you need to wait until the yearly renewal to update your details.

When you must tell the tax office

There are some circumstances where you need to tell the tax credits office within one month of the change taking place. If you don't let it know, you may be fined up to £300.

  • Change of status.

    If you move in with a partner, get married, separate or leave the UK for longer than eight weeks.

  • Change in working hours.

    If you start or stop working or change your number of hours (especially if they drop below your threshold).

  • Changes for children.

    If you have a child, your childcare costs go up or down, your child leaves home or you start getting childcare vouchers.

When you should tell the tax office

There are some circumstances where you have longer to tell the tax office, sometimes until renewal. Yet don't wait, as it could also lead to overpayment problems, which means you're earning more money than you should and at the end of the year it'll ask for the cash back. Not good if you've already spent it!

  • Income changes.

    You change your job or your income goes up or down.

  • Children's education.

    If it's changing, eg, your kids are staying in education after age 16.

  • Address changes.

    You move house, bank account or have a new phone number.

Whether you need to notify the tax office or not, when you do tell it, keep notes. It's not unheard of for the tax office to say you didn't get in contact with it when you say you did, so get yourself a tax credits file and write down details of every communication you have with it. Include who you spoke to and when you called.

How to renew your claim

If you get tax credits, you'll be sent a renewal pack each year in May or June. The deadline to renew (if you need to) is usually 31 July.

See what's in the pack? for info on exactly what you need to check. It's vital you deal with this as it has much more significance than you may think. And crucially...

The tax credit hotline is often engaged near the deadline. This causes nightmares, so call now to avoid them.

Not being able to get through to the hotline is common in the run-up to renewal deadlines. Each day you leave it, the worse it gets. HMRC told us the least busy time to call is mid afternoon.

Check the renewal even if you DON'T want to claim anymore

This is because the renewal pack isn't just estimating your credits for the next year, it's checking whether you were correctly paid for the last year. So failing to sort it out could leave you suffering overpayment or underpayment problems.

How does the renewal system work?

The packs look at how much you earned in the previous tax year (April to April) which is then used to check you received the correct payment last year and also to calculate the amount you’ll get the next year.

Some people (usually those with higher claims) may also receive a letter asking for more information on their claim. This is not a scam, though if you are contacted, it'll only be by letter, not email or phone.

What’s in the pack?

Everyone gets an annual review notice. Some will get an annual declaration form too.

The review notice

Brown envelope Only return it to make changes

What is it? It's simply a statement for you to look through and indicate if anything has changed. At the top it says "Tax Credits - Annual Review for the year ended 05/04/xx".

Who gets it? Everyone, but for those who ONLY get this form it will come in a BROWN A5-sized envelope. This applies to:

  • Those who just get the family element of child tax credit

  • People who claimed tax credits but didn't get them because their income was too high

  • Those who received income support, income-based JSA, income-related ESA or pension credit for all of the tax year

  • People whose entitlement to tax credits stopped in the previous tax year

What to check? Check all the information is correct, especially income. If it is (and you only received this form in a brown envelope) you don't need to do anything, your credits will be automatically renewed.

However if any information is wrong, let the tax office know as soon as possible via the Tax Credit Helpline on 0345 300 3900, or online via the HMRC website. You'll need your NI number, tax credit renewal pack, details of any changes to your circumstances, and total income (including your partner's) for the last year, to hand.

The hotline commonly gets mega-busy in the run-up to renewal deadlines. HMRC says the least busy time to call is mid-afternoon.

Please report hotline delays in the forum.

What if I miss the deadline? If you have changes and miss the deadline, you risk over- or underpayments - though HMRC says it can give a few days' leeway.

Underpayment means you won't get what you're due, and even if you do try to claim later, you can only backdate for one month so may miss out.

Overpayment means they give you too much and, while this may sound good, the tax office will ask for the cash back even if you've spent it. This is one of the single biggest tax credit nightmares and you need to be careful.

If you deliberately mis-lead over tax credits you can be fined or even prosecuted.

The declaration form

You MUST return it if you get one

What is it? It's a form with a few assessment questions on. You MUST complete it and return it to the tax office or renew it online if you've been sent one, or your tax credits may stop. The declaration form is in four parts: benefits, income, circumstances and a place to sign, and has a few coloured boxes to complete.

Who needs to fill it in? Only people who receive one - you'll know as it'll come in a WHITE A4-sized envelope. If you don't get one, you don't need to fill it in. It's as simple as that.

What to check? You need to check whether the details on your review form are correct but make any changes on the declaration form.

What to do? If it's all correct, you can renew your tax credits online via the HMRC website or through the HMRC mobile phone app (free download from Google Play or iTunes). If you don't want to do it online, sign the form and send it back, or call the Tax Credit Helpline on 0345 300 3900 to confirm your details.

Got changes? Complete the form, sign and send it back. Alternatively, you could call the helpline on 0345 300 3900, report them online through the HMRC website. You'll need your NI number, 15-digit number at the bottom of your declaration form, and income and benefits details.

The hotline commonly gets mega-busy in the run-up to renewal deadlines. HMRC says the least busy time to call is mid-afternoon.

Please report hotline delays in the forum.

What if I miss the deadline? If you have changes and miss the deadline, you risk over- or underpayments - though HMRC says it can give a few days' leeway.

If you fail to send the declaration form back your tax credits will stop. You'll then need to make a new application, which can only be backdated for one month at most, so you could miss out on payments AND have to pay back money you've already received.

If you deliberately mislead HMRC over tax credits you can be fined or, in the very worst cases, prosecuted.

Top tips for filling out the renewal forms

If you find the process complicated, here are some tips to help make it as easy as possible:

  • Read the guidance notes.

    The notes that come with your form will tell you exactly what to do. If you're still finding it confusing, follow the tips below.

  • Let them know if the info is wrong.

    If any of the details on the form are incorrect (including info you told them at your last renewal or something you've updated during the year) put an ‘X’ in box 3.2 on your annual declaration form and update the details.

  • Tell it about all of your income.

    If you are sent a declaration form, make sure it includes the income you get from all of your jobs (and your partner's if relevant).

  • Sign the form.

    One of the most common mistakes is not signing the declaration form. If it's not signed, it'll delay your renewal - so double-check you've done it.

What to do if you’ve overpaid

coins-overflow Overpayments are where you've received too much money in the past that you don't qualify for. It might sound good but the problem comes when the tax credits department asks for its money back and you've already spent it.

Too many overpayments meant tax credits' reputation suffered in the early years. The situation has improved with time, but, it isn't perfect now and many still do not trust the system.

Overpayments usually happen because...

  • You didn't tell the tax office about changes

    You normally have one month to tell the tax office of any key changes in your circumstances, though discretion is given if you or a family member were seriously ill.

    If you don’t let the office know of any changes within one month you could be asked to pay back any overpayments, so do it as quickly as possible to avoid potential issues.

  • The tax office didn't meet its responsibilities

    It either made a mistake in your calculations or took longer than a month to update your records once you told it about any changes.

Do I have to repay overpayments?

If it's your fault you do have to repay. But...

If the tax office is at fault, and you've correctly told it in time of any changes, you won't have to repay.

Of course there may be a problem with evidence, and that can get tricky. As a general rule, if you did it right and the tax office failed to carry out its responsibilities, the excess cash you were paid specifically because of that error is yours. The tax office has also been told it can't take legal action for overpayments if you've not made any mistakes.

Don’t know why you got a overpayment letter?

If you don’t know why you overpaid, in the first instance call the Tax Credits Helpline on 0345 300 3900 and ask for an explanation, but follow up any issues in writing. If there isn’t a proper reason, you can challenge the decision. If nothing has changed, then there’s no reason for you to have been overpaid. By challenging it, your situation should be looked at again.

In your letter, explain that you don’t know why it's an overpayment as nothing's changed, and as you'd indicated all the facts, you don't believe you should’ve been overpaid.

What if you think it's made a mistake?

If you think the tax office has made a mistake in its calculations you can start a dispute or appeal against repaying. Your overpayment will then be placed on hold while your case is investigated (a 'normal' complaint will not hold the overpayment).

  • Disputes.

    Where you gave it the right info but it didn't act on it. If you disagree that you should pay back an overpayment - for example you told it you had a decrease in childcare costs - but it continued to pay you the higher amount anyway, fill in form TC846 or send a letter.

  • Appeal.

    Where it's asking for money back it shouldn't be

    If you disagree with the amount of tax credit you've been given, you can put in an appeal using the WTC/AP form and it'll be looked at by a tribunal. You must fill in the appeal form within a month of being told about the overpayments, so act quickly.

    An example of an appeal is when you've been correctly paid tax credits for three children, but it's wrongly saying it's an overpayment as you’ve only got two who are eligible.

Whether it's an appeal or a dispute, give all information you can. Include any evidence and why you don't think you should repay.

If that's not successful, you can still make a complaint, go to the adjudicator or even the Parliamentary Ombudsman.

  • If you're still getting tax credits

    It's likely your future payments will be reduced so the tax office can recoup the cash you've already had. This is usually 10%-25% of your weekly payment (but could be more for higher earners).

  • If your payments have stopped

    If your payments have stopped, whether because you no longer qualify or didn't renew in time, you'll normally get a letter asking you to repay the entire amount within 30 days. A separated couple will usually be asked to pay back half of the money each.

    If this happens and you can't afford it, simply contact the tax office and politely inform it. It will usually be possible to spread the repayments over a year. In extreme circumstances you may get even longer, or if the tax office believes you'll never be able to repay, have the entire amount wiped.

Get help on overpayments

Download the Low Income Tax Reform Group's detailed PDF guide to overpayments and how to cope with them below. There's also more help...

Should I be getting tax credits?

Tax credit payments now spread far and wide. Depending on the number of children you have, some families earning up to around £72,000 may qualify for free cash, although the help drops quickly after £46,000.

How to check There are two easy online routes to use to check whether you're entitled to tax credits.

  • Use the HMRC calculator

    The Government has its own HMRC calculator just to look at tax credits. It's a bit clunky but does the job.

  • Do a 10-minute benefits check-up

    For a full check-up including other benefits as well as tax credits, see the Benefits Check-Up guide.

When you can put a claim in

You can claim any time during the year and initial claims can be backdated for up to one month. The easiest way to do it is via the Tax Credit Helpline on 0345 300 3900.

In your first year you'll be paid from the date of your claim until the end of the tax year (5 April), after that the payments will run every tax year.

There are two different types of tax credit...

Child tax credit: In detail

Child tax credit is for those who take care of any children eligible for child benefit (under the age of 16 or up to 20 if they're in full time education or registered with the careers service). Importantly, you don't need to be working.

It's made up of a series of different and separate elements, and the total you get is the sum of all those different parts.

Child tax credit - maximum per element (the more you earn, the less you get)
Child tax credit elements Max annual amount for 2013/14 Max annual amount for 2014/15
Family element: For anyone with one or more children £545 £545
Child element: One amount per child £2,720 £2,750
Disabled child element: For each child that receives DLA, is registered blind or has been registered blind in the last 28 weeks you'll get this on top of the child element £3,015 £3,100
Severely disabled child element: For each child who receives the highest rate care component of DLA, you'll get this on top of the child element and disability element £1,220 £1,255

Income levels

If your household income is £16,010 or below you'll get the maximum amounts above. Anything you earn above this will reduce the amount until you reach the income limits below:

Maximum household income (excluding childcare and disability elements)
Number of kids 2013/14 2014/15
One £25,800 £26,000
Two £32,450 £32,700
Three £39,050 £39,400
Four £45,700 £46,100

Working tax credit: In detail

It's an oft-held criticism that some people are better off on benefits than working. The aim of working tax credit is to give an extra boost to those in work on lower pay, to stop that happening.

The payouts fall into three groups:

  • Working over 16 hours a week

    Single parents or those in a couple who are disabled, a carer or over 60.

    Also applies to the working partner if their other half is ill, in hospital or prison.

  • Working over 24 hours a week

    Couples not claiming for childcare costs need to work at least 24 hours between them (if both working, one must do a minimum of 16). To claim for childcare costs both partners need to work at least 16 hours.

  • Working over 30 hours a week

    Here, provided you're over the age of 25 and within the income criteria below, you should qualify.

As with child tax credit, it's made up of a series of different and separate elements, and the total you get is the sum of all those different parts.

Working tax credit - maximum per element (the more you earn, the less you get)
Working tax credit elements Max annual amount for 2013/14 Max annual amount for 2014/15
Basic element: For anyone who works the correct hours (and meets the tax credit criteria above). £1,920 £1,940
Couples and lone parent element: Either a payment for a second qualifying person in a couple or if you are a single parent. £1,970 £1,990
30 hour element: An extra payment if you work at least 30 hours a week. (1) £790 £800
Disability element: For working people who are disabled. (2) £2,855 £2,935
Severe disability element: For each person who receives the highest rate care component of DLA or the higher rate of AA you'll get this on top of the disability element. (2) £1,220 £1,255
Childcare element: Allows you to get back up to 70 per cent of eligible childcare costs. See the table below for more info. See the table below for more info.
(1) One payment per couple. (2) One payment per person.

Income levels

If your household income is £6,420 or below, you'll get the maximum amounts above. Anything you earn above this will reduce the amount until you reach the income limits below.

The levels for those with children are based on claiming maximum childcare costs, figures are lower if childcare costs are below £175/week for one child and £300/week for two or more.

Maximum household income (excluding disability element)
Number of kids 2013/14 2014/15
None, single £13,000 £13,000
None, couple £18,000 £18,000
One £41,300 £41,500
Two £59,100 £59,300
Three £65,700 £66,000
Four £72,300 £72,750

If you're unable to work due to sickness and you have a child, or you're on maternity leave, you may also be able to claim. Check with the Tax Credit Helpline on 0345 300 3900.

Tax credit Q&As

What counts as income for tax credit purposes?

What should I do if I think I've been underpaid tax credits?

When will I get the payments?

What counts as a couple?

Who will the payments go to in a couple?

Can I claim for childcare costs?

Where can I find out how much credit I am entitled to?