Tax Credits

How to claim child tax credit and working tax credits, renew or appeal

Tax credits can mean a payout, potentially in the £1,000s, even after recent cuts. Unlike many other benefits, you MUST renew them each year. Most people will now have to claim universal credit, but some can still make new tax credit claims.

It's 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 future. 

In this guide...

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.

  • Single or couple?

    Couples need to make joint claims based on household income.

  • 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. See detailed rules.

  • 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.

The seven need-to-knows

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

  1. How much are tax credits worth each 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, 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 and hours worked (families with four kids can earn up to around £46,000). 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.

  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. Even if you've correctly informed them of changes and they overpay you, you'll still have to give the money back. You're expected to keep an eye on your payments and let them know if you don't see a change. 

    Be aware that if you live in a universal credit area, reporting a significant change of circumstance can mean that you'll have to apply for universal credit instead. You MUST still report changes - if you don't then your benefits can stop altogether. 

    See the Changed Circumstances section to check what you need to tell them.

  6. New claimants will only get the 'child element' for up to two children

    Since 6 April 2017, most people can only get the child element of child tax credit for up to two children. You'll still be able to claim it for more than two children if they were born before 6 April 2017.

    A third child or subsequent children won't be eligible for tax credit claims (though you'll still be able to claim child benefit).

    If you are receiving statutory maternity pay, you should deduct some of this pay from your gross earnings - fail to do so and you could miss out on an average £495/year. If you receive more than £100 per week, you should only include £100 for that week.

    You can also deduct payments you've received for statutory paternity, shared parental or adoption pay up to £100/week.

  7. You may be able to claim universal credit instead (although it may be worth less to you)

    Universal credit is a monthly benefit that replaces (or if not yet, soon will) six means-tested benefits including child tax credit and working tax credit. It's designed for people both in and out of work.

    The scheme is being rolled out to ALL eligible households nationwide - previously, the only group of people able to get it across the country (in England, Scotland & Wales) were single, unemployed people without children. This is expected to complete in late December 2018.

    Once it's fully rolled-out in your area, you won't be able to make a new claim for working tax credits - you will have to apply for universal credit. Those with three or more children will be able to apply for child tax credits, even in universal credit areas, but we don't know how long you'll be able to still do so after the roll-out finishes. 

    However, for many it'll be more beneficial to start claiming tax credits NOW if you still can, as you may otherwise be worse off under universal credit.

    It's worth nothing that those who are claiming tax credits when universal credit is introduced to their area can continue to do so unless they have a change of circumstance or need to make a new claim. If nothing changes, you'll be moved over to universal credit sometime between July 2019 and December 2023 as part of the 'managed migration'.

    Once you've moved over, you'll receive top-up payments if your universal credit award is worth less than your tax credits were. However, you'll only get this money if you're moved over as part of the 'managed migration', which is another reason to apply now if you can.

    See our Universal Credit guide for more on eligibility, when it'll be coming to your area and how to claim it.

Tell them if your circumstances change

It'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 credit 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 credit 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

Parents of children staying on to take A-levels, start further education or take approved training courses must tell HMRC what they're doing or risk losing out on child tax credits (and child benefit too). This is because when a 16-year-old finishes their GCSEs, the taxman assumes they have left to join the world of work.

This triggers an end to child benefit and child tax credit payments for them unless the parents get in touch to confirm their children remain in education.

They must also inform the taxman if their child starts a college course in September but then later decides that it's not for them and leaves. This will then avoid the need to repay overpaid benefits at a later date.

  • 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.

Also have a look at the Government's detailed list of changes you need to report to the tax credit office.

How to renew your claim

If you get tax credits, you'll be sent a renewal pack each year in May or June, and the deadline's usually 31 July each year.

If you haven't received your renewal pack then call the tax credits helpline ASAP on 0345 300 3900.

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.

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 – black line on the form

TaxCreditsformblack

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. The form will have a BLACK line underneath your address and reference number. 

What to check? Check all the information is correct, especially income. If it is 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.

  • 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 mislead over tax credits you can be fined or even prosecuted.

The declaration form – red line on form

TaxCreditsformred

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.

Who needs to fill it in? Only people who receive one – you'll know as it'll have a RED line underneath your address and reference number. 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.

What to do? You MUST renew your tax credits by the deadline. While you can do it by filling out and signing the form and posting it, the easiest way is to do it online.

  • 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 mislead over tax credits you can be fined or even prosecuted.

Ways to renew your claim

You can renew your claim in several different ways. The deadline is usually 31 July - don't wait until the last minute as you may risk missing it and having your tax credits stop.

You can renew your tax credits, tell the tax credit office about any changes and find out how much and when you'll be paid using HMRC's online tax credits service.

You can also use HMRC's free mobile app, available for both iOS and Android.

If you'd rather speak to a person, you can use the telephone helpline, but beware - it usually gets very busy leading up to the deadline, so the sooner you renew the better. HMRC says the least busy time to call the tax credit helpline on 0345 300 3900 is mid-afternoon.

What to do if you've overpaid

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 adispute 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.

    You must send your dispute form within 3 months of either the date on the first letter, statement or notice you received telling you that you've been overpaid or the 'decision date' on your Annual Review notice (although exceptions to this time limit are made in some circumstances).

  • 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 which is also know as asking for a 'mandatory reconsideration'. 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.

    If you disagree with the outcome of the mandatory reconsideration then you can appeal to the Social Security and Child Support Tribunal in England, Scotland or Wales or the Appeals Service Northern Ireland.

If you disagree entirely with a tax credits decision and you think the amount you've been awarded is wrong then it's best to first call the tax credit office on 0345 300 3900 as it may be a simple case of human error.

However, 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...

Help from other MoneySavers:

Go to the Benefits & Tax Credits board.

Specialist detailed guidance:

Go to the Low Incomes Tax Reform Group.

Tax credit forum:

For more info, go to Tax Credit Casualties.

One-on-one help:

Citizens Advice Bureau and local law advice centres often have advisers who will be able to help you appeal or dispute unfair overpayment.

Should I be getting tax credits?

Tax credit payments now spread far and wide. Depending on the number of children you have, some families – in exceptional cases – earning up to around £73,000 may qualify for free cash, although the help drops quickly after £46,000.

How to check There are three 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 full benefits check-up

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

  • Two minute check that shows universal credits too

    For a briefer check-up including a comparison to what you'll get under the new universal credits system, see the free online calculator from Entitledto.

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 2018/19
Family element: For anyone with one or more children £545
Child element: One amount per child £2,780
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 £3,275
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 £1,325

Income levels

If your household income is £16,105 or below you'll get the maximum amounts above. If you earn above this, your tax credits award will be reduced by 41 pence for every £1 you earn. As how much you can get depends on your personal circumstances, it's always best to use a benefits calculator to see how much you might be entitled to.

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 2018/19
Basic element: For anyone who works the correct hours (and meets the tax credit criteria above). £1,960
Couples and lone parent element: Either a payment for a second qualifying person in a couple or if you are a single parent. £2,010
30 hour element: An extra payment if you work at least 30 hours a week. (1) £810
Disability element: For working people who are disabled. (2) £3,090
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) £1,330
Childcare element: Allows you to get back up to 70 per cent of eligible childcare costs to a maximum of £122.50/week (one child) or £210/week (2+ children).  
(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. If you earn above this, your tax credits award will be reduced by 41 pence for every £1 you earn.

How much you'll get will depend on your personal circumstances, so, again, it's best to use a benefits calculator to see how much you could get.

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

  • This is any money earned from paid work (overtime only counts if you work the hours regularly), self-employed profits or some benefits (such as contribution-based JSA or employment and support allowance, incapacity benefit (in some cases) or carer's allowance but not child, housing, council tax or disability benefits).

    It also includes any extra income above £300 you (or a partner) receive from a pension, savings, renting out a property, or things such as a trust or interest in the estate of a person who has died.

    You don't need to include money paid for child maintenance or your children's income and some maternity benefits are partly excluded - however, you could lose out on an average £495 if you don't deduct the right amount of maternity pay from your gross income.

    For the self-employed, income is any profit made in the last tax year, as submitted on your tax return. If you haven't finished your tax return yet, make a best guess based on your profit so far. If your business is new and you've had no income from it in the last year, you can leave the income section empty.

     

  • This is an easier scenario than overpayment. Usually your correct payment will be calculated as soon as you send back your renewal forms, or after 31 July if you don't need to send your review form.

    If you think you've been underpaid at any other time, do a full check on the HMRC calculator and contact the Tax Office Helpline on 0345 300 3900 to let it know.

  • You should start to get payments within a few weeks and you'll be paid either weekly or every four weeks straight into your bank, building society or Post Office account. If you start to work too few hours your payments will continue for four weeks, otherwise you'll no longer get the credit if your eligibility stops.

  • If you're married or living with someone, then you must put in a joint, rather than single, application. You can only put in a single claim if you don't have a partner. If you're in a permanently separated couple, then you're counted as a single parent and any payment is made to the child's main carer.

  • You only get one payment per couple. For child tax credit or the childcare element of working tax credit, payments are made to the parent who mostly looks after the child. Working tax credit payments will go to either partner, so you need to decide which account the money is paid into.

  • If you're paying for childcare it's important to include these costs in your tax credit claim, as the money available is huge, and it's possible 100,000s of families are missing out.

    The average weekly payout is around £60 – that's over £3,000 a year!

    See the special Childcare Tax Credits guide for more info on what counts as childcare (from babies in swaddling cloth to stubbly six-foot 15-year-olds).

  • It's easy to do a quick check-up using the HMRC calculator, or search for entitlement to other benefits via the benefits calculator.

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