Tax Credits: Changes in your circumstances
In this section:
o How to notify changes
o Why you need to notify changes
o Compulsory notification
o Changes which affect your maximum entitlement
o Changes in income
o Changes you may notify in advance
How to Notify Changes
The Tax Credit Office prefers you to contact it via the Tax Credit Helpline to notify
changes. Telephone calls are recorded so you should note the day and time of your call,
and the person you spoke to, as a handy reference, in case there is a query about the call.
You may also notify changes by post.
Why you need to notify changes
Once you have made a claim for tax credits, you need to notify the Tax Credit Office of
certain changes. You need to do this:
Because some notification is compulsory
You may lose entitlement if you do not notify on time
Because notifying changes will help avoid overpayment problems
These issues are covered in the sections below.
You must tell the Tax Credit Office within one month of the following changes:
If you stop being eligible as a single claimant, or you stop being part of the couple
for which you made a joint claim
If you or your partner leave the UK permanently or for more than 8 weeks (12
weeks if connected with illness or bereavement)
In these two cases you may able to make a new claim, but your old claim will lapse
If you are no longer entitled to tax credits. (For example, if you have been
claiming Working Tax Credit only and you no longer work the necessary 16 or 30
hours per week).
If you made a claim for Child Tax Credit on or after 1 May 2004, and you and
your partner lose the right to reside in the UK
If your weekly childcare costs cease or fall by £10 per week or more, for 4 weeks
in a row
You cease to be responsible for a child or qualifying young person
A child or young person ceases to qualify for support
Your working hours change so that you cease to fulfil the 16 hour or 30 hour
qualifying remunerative hours condition
Juan travels to Spain on 1 June 2008 because his mother is very ill. He leaves his wife
Suzanne and their three children in the UK. Juan returns to the UK on 30 August. This is
more than 12 weeks after he left so the couples’ joint claim would lapse. Suzanne would
need to make a new single claim to cover the period from 23 August (12 weeks after Juan
left) until 30 August when he returns. From 30 August, the couple would need to make a
fresh joint claim.
Changes which affect your maximum entitlement
Changes in your circumstances can affect your maximum entitlement. You do not need to
notify all these changes to the Tax Credit Office at the time, but if you do not, you may
lose entitlement, because additions to your claim can only be backdated for three months.
The only exception is disability and severe disability elements of both Working Tax
Credit and Child Tax Credit. Here longer time limits can apply due to the processing time
for Department of Work and Pensions disability benefits that are needed to make the tax
credit claim effective. You need to notify the Tax Credit Office when you make a claim
to Disability Living Allowance (DLA), and again within three months of the award, in
order for the Tax Credits disability element to be backdated to the date of entitlement to
On the other hand, if the change would reduce your maximum entitlement, then early
notification avoids overpayments, with the possibility of reduced payments in future or
The types of changes that may increase your entitlement and should be notified within 3
months to avoid losing entitlement include:
Increases in childcare costs by more than £10 per week for 4 weeks in a row
The birth or adoption of a child
A young person aged 16-18 returns to non-advanced education
Your working hours increase and take you over the 16 or 30 hour thresholds –
meaning that you begin to qualify for working tax credit (when you are receiving
only child tax credit) or become entitled to the 30 hour element or the childcare
Note – compulsory changes must be notified in addition to the changes outlined above.
Changes in income
Unless you are claiming income support or income based jobseeker’s allowance, tax
credit awards are affected by your income.
Rises in income
Starting with claims for the year 2006/07, increases in income of up to £25,000 are
ignored when a claim is finalised. This is a ten fold increase from the figure of £2,500
used for finalising claims for 2005/06 and earlier years. This means that, for most people,
increases in income are unlikely to affect their current year claim from 2006/07 onwards.
Falls in income may still have an immediate affect.
Reporting increases in income is still important as income rises in the current year will
affect your entitlement for the following year. In particular, you should ensure that the
Tax Credit Office is aware of rises in your income before the end of each tax year. This
will ensure that you are not overpaid tax credits from the start of the next tax year.
Andrew and Sheila have three children. Their household income for 2007/08 was
£18,500. During 2008/09 Sheila returns to work and household income rises. By
February 2009 total household income for 2008/09 is expected to be £28,500. Andrew
and Sheila should notify the Tax Credit Office of the higher income before 5 April 2009,
otherwise their 2009/10 tax credit award will be based on income of £18,500 (increased
by the Tax Credit Office to reflect general rises in income), whereas it should be based
on £28,500. They would be overpaid from 6 April 2009.
Falls in income
Claimants whose income falls may report a fall in income – by giving an estimate of their
revised household income for the year – and may ask to have their tax credit payments
increased for the rest of the year. Payments for the earlier part of the year will not be
revised. Instead, an amount representing a potential underpayment for the earlier part of
the year (called a ‘provisional payment’) will be shown on the award and held by the Tax
Credit Office until the claim is renewed at the year end. If your estimate of income was
accurate, then the ‘provisional payment’ will be paid to you as a lump sum. If your
estimate was too low, then the provisional payment will be used to reduce any tax
overpayment that arises when the claim is finalised.
If you report a fall in income and your income then rises, you should contact the Tax
Credit Office as soon as possible to notify the change. Such rises in income affect your
entitlement in the current year.
Keeping income figures up to date
It is important to remember that your actual income for the current year is used to finalise
your tax credit award; but your in-year payments will be based either on last year’s
income or an estimate of this year’s income. HM Revenue and Customs should be kept
up to date with changes in your income as this will reduce the risk of overpayments.
If your current year award is based on an estimate it is important that the estimate is
accurate and kept up to date.
If you are an employee, you may have a fairly good idea what this is likely to be. For a
self employed person, an accurate income figure may not be available until some time
after the end of the tax year.
Changes you can notify in advance
Most changes need to be notified once they have occurred, or within 3 months of that
date. There are however a few changes that you may notify in advance. You may notify
the Tax Credit Office up to 7 days in advance that
You have accepted a job offer and expect to start work within 7 days
You have arranged child care and will incur childcare costs
Your childcare costs are going to change by£10 per week or more