Tax credits renewal deadline reminder

The 31 July 2021 is the reporting deadline for families and individuals that receive tax credits. By this date they will need to tell HMRC about any changes to their circumstances or income and to renew their tax credit application. As in previous years, there is likely to be a last-minute rush and it may be difficult to contact HMRC by phone. Claims can be renewed by post, phone or online. At the beginning of July, there were still some 440,000 claims that had to be renewed.

Once the deadline has expired, anyone who has not yet renewed their tax credits should still ensure they do so as soon as possible as otherwise their payments may be stopped, and monies received since last April may have to be repaid. We would strongly advise any of our readers still to renew their tax credits to do so as a matter of urgency.

Over 2.5 million renewal packs were sent out by HMRC between late April and early June. A renewal is required if the pack has a red line across the first page and it says, 'reply now'. If the pack has a black line and says ‘check now’, recipients will need to check the details are correct. If the details are correct the tax credit awards will be renewed automatically.

Taxpayers are not required to report any temporary falls in their working hours because of coronavirus. However, other differences that could affect entitlement to tax credit claims such as changes to living arrangements, childcare, working hours, or income (increase or decrease) should be reported to HMRC.

Reminder to look out for tax credit renewal packs

HMRC has begun sending the annual tax credit renewal packs to some 2.5 million tax credit claimants and is encouraging recipients to renew their tax credits claim online. The packs are being sent out over the next 6 weeks and should be with recipients by 4 June 2021. 

A renewal is required if the pack has a red line across the first page and it says, 'reply now'. Families and individuals that receive tax credits should ensure that they renew their tax credit claims by 31 July 2021. Claimants who do not renew on-time may have their payments stopped. 

If the renewal pack has a black line across the front page and says ‘check now’, then you will need to check your details are correct. Taxpayers need to notify HMRC where there have been changes to the family size, child care costs, number of hours worked and salary. Details of previous year's income also need to be completed on the form to allow HMRC to check if the correct tax credits have been paid. Claimants must also inform HMRC of any changes in circumstances not already reported during the year such as new working hours, different childcare costs or changes in pay.

Taxpayers are not required to report any temporary falls in their working hours as a result of coronavirus. They will be treated as if they are working their normal hours until the Coronavirus Job Retention Scheme closes.

Universal credit will eventually replace tax credits, and some other social security benefits. You cannot claim tax credits and Universal Credit at the same time.

One-off £500 payment for working households receiving tax-credits

As part of the March 2021 Budget, the Chancellor announced that the temporary £20 weekly uplift in Universal Credits would continue for a further six months, until the end of September 2021. It was also confirmed that Working Tax Credit claimants would receive equivalent support. It appears that it was operationally difficult for this support to be delivered on a periodic basis and the government therefore decided to deliver this support via a £500, one-off payment.

The one-off payment provides extra support following the end of the 2020-21 tax year. It is though that more than a million households up and down the country will be eligible for the one-off payment if, on 2 March 2021, they were getting either:

  • Working Tax Credit
  • Child Tax Credit and were eligible for Working Tax Credit but did not get a payment because their income was too high to get Working Tax Credit payments

There is no requirement to contact HMRC or apply for the payment. 

HMRC will make contact by text message or letter during April to confirm if you are eligible.

If you are eligible, you should get your payment direct to your bank account by 23 April 2021. You will not see the payment on the online tax credit service.

The payment is non-taxable and will not affect your benefits. You do not need to declare it as income on your Self-Assessment tax returns or for tax credit claims and renewals.

Final reminder to renew tax credit awards

Friday 31 July 2020 is the deadline day for families and individuals that receive tax credits to tell HMRC about any changes to their financial circumstances. As in previous years, there is likely to be a huge last-minute rush and it may be difficult to contact HMRC by phone. Claims can be renewed by post, phone or online.

Once the deadline has expired anyone who has not yet renewed their tax credits should still ensure they do so as soon as possible as otherwise payments may be stopped, and monies received since April 2020 may have to be repaid.

We would strongly advise readers who have not dealt with this annual chore to renew their tax credits as a matter of urgency.

All renewal packs should have been received by the end of June. A renewal is required if the pack has a red line across the first page and it says – reply now. If the pack has a black line and says – check now – recipients will need to check the details are correct. If the details are correct, the tax credit awards will be renewed automatically.

While most tax credit awards will be renewed automatically in 2020, the self-employed, those in receipt of taxable social security benefit, or those who have other income may need to review their total household income and tell HMRC if the income detail held is incorrect.

Tax Credits updates required this month

Families and individuals that receive tax credits should ensure that they review their tax credit claims by 31 July 2020. Claimants who do not inform HMRC about relevant changes in their circumstances by the deadline date may have their payments stopped.

HMRC has sent tax credits renewal packs to tax credit claimants and is encouraging recipients who need to respond to do so online. All renewal packs should have been received by the end of June. A renewal is required if the pack has a red line across the first page and it says, 'reply now'. If the pack has a black line and says, 'check now', recipients will need to check the details are correct. If the details are correct the tax credit awards will be renewed automatically. The self-employed, those in receipt of taxable social security benefit or those who have other income may need to review their total household income and advise HMRC if the income held is incorrect.

As part of the package of measures to tackle the Coronavirus outbreak, the government in April announced that the basic element Working Tax Credit payments would be increased from an expected £1,995 to £3,040 for the 2020-21 tax year starting on 6 April 2020. This increase of £1,040 is an increase equivalent to £20 per week for the current tax year. The actual maximum additional amount that Working Tax Credits recipients receive depends on their individual circumstances, including their level of household income.

Working Tax Credits are now increased

We would like to remind our readers that as part of the package of measures to tackle the Coronavirus outbreak, the basic element Working Tax Credit payments was increased to £3,040 for the 2020-21 tax year.

This increase of £1,045 is equivalent to an extra £20 each week for the current tax year. The actual amount that Working Tax Credits recipients will receive depends on their specific circumstances, including their level of household income.

If you claim Working Tax Credits, you do not have to take any action or contact HMRC – the increase in your payments should have started automatically from 6 April 2020.

The government also increased child benefit, other tax credits rates and thresholds and guardian's allowance by 1.7% from 6 April 2020.

There have also been corresponding increases in Universal Credit available to many employed and self-employed workers on low incomes or who have become unemployed. This has seen the government increase the basic element and remove the minimum income floor in a move to benefit the self-employed. The minimum income floor does not currently apply, this measure is due to last until the Coronavirus outbreak is over.

Minimum hours for Tax Credits

It has been confirmed that the minimum weekly hours requirement to be eligible for tax credits has been temporarily suspended because of coronavirus. Tax Credits can provide top-up payments to those on low incomes.

Under normal circumstances, you must work a certain number of hours a week to qualify for these credits. If you are working reduced hours due to coronavirus or as a result of being furloughed your tax credits payments will be unaffected if you are still employed or self-employed.

HMRC will treat you as working your normal hours until the Job Retention Scheme and Self-Employment Income Support Scheme close, even if you are not using either scheme.

You should still notify HMRC of any other changes in income, childcare and hours in the normal way. You must tell HMRC if you (or your partner) lose your job, are made redundant or cease trading.

Tax credits increase

The basic element Working Tax Credit payment has been increased from an expected £1,995 to £3,040 for the 2020-21 tax year that commenced 6 April 2020. This is part of a package of measures to help support families coping with the Coronavirus outbreak.

This increase of £1,040 is an increase equivalent to up to £86.67 per month for one year from 6 April 2020. The actual amount that Working Tax Credits recipients will receive depends on their circumstances, including their level of household income.

The government had previously confirmed that from 6 April 2020, the child benefit rates, and other tax credits rates and thresholds would be increased in line with the Consumer Prices Index (CPI), resulting in a 1.7% increase. For example, the child benefit rates for the only or eldest child in a family increased to £21.05 and the weekly rate for all other children to £13.95.

These changes were announced before the Coronavirus outbreak and represented the first increases in most rates since 2016. During this period, most working-age benefits (except for disability and carer’s benefits) were held at their 2015-16 cash value.

If you claim Working Tax Credits or receive any other benefits such as Child Tax Credits, Child Benefit or Guardian’s allowance then the increased payments should be automatically applied.