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Wednesday, 3 October 2023

How to avoid being paid too much or not enough tax credits

Tax credits are flexible and change when your life changes. If you tell the Tax Credit Office about a change, they'll work out your new amount of tax credits. Your new payments may mean you've been getting too much money (an overpayment) or too little money (an underpayment).

Check the information on your claim form is correct

The Tax Credit Office use the details you give them on your claim form to work out your tax credit payments.

You should carefully check that all the details on the form are accurate, complete and up to date. Pay particular attention to any dates and details of your income.

Check your tax credits award notice

When you claim tax credits for the first time, or tell the Tax Credit Office about a change, they will send you an award notice. This tells you how much money you will receive based on the information you gave them.

It is important that you check your award notice carefully when you get one - use the checklist that comes with it. You must tell the Tax Credit Office within one month if something is wrong, missing or incomplete, or if there's anything you don’t understand.

If you don't it might mean you:

  • are not getting all the money you are entitled to
  • could be building up an overpayment

You can get in touch with the Tax Credit Office by calling the Tax Credit Helpline.

The Tax Credit Office aims to send you a new award notice within 30 days of you telling them about a change. Get in touch with them as soon as possible if you don't receive one within 30 days.

If it's your first claim, and your payments start, but you don't receive an award notice, tell the Tax Credit Office as soon as possible.

Check the payments going into your bank account

It is also important to check the amount of money going into your bank account. Your award notice will show your first payment, plus the amount to be paid every week or every four weeks.

If a payment doesn't match the amount on your award notice call the Tax Credit Helpline as soon as possible.

Tell the Tax Credit Office about any changes

When you tell the Tax Credit Office about a change in your circumstances, they will recalculate your tax credit payments.

It's your responsibility to tell the Tax Credit Office about any changes in your circumstances. If you don't, they might not know about it until you're asked to renew your tax credits after the end of the year.

At this point the Tax Credit Office checks whether the money you have received matches your income and circumstances. It may turn out that you have not received all the money you should - an underpayment. Or you could have received too much money - an overpayment.

Changes that could mean your tax credits go up

Tell the Tax Credit Office about these types of changes as soon as possible - for example having a new baby. It's best to report changes like this straight away, as any increase in your payments can only be backdated by up to one month.

Changes that could mean your tax credits go down

Tell the Tax Credit Office about these types of changes within one month - for example a child leaving full-time education. If you don't, you could be paid too much money (an overpayment) and may also be charged a penalty of up to £300.

How to report changes

You can report changes by calling the Tax Credit Helpline or writing to the Tax Credit Office.

You can't email, or report changes online for tax credits.

Renew your tax credits on time

You'll be asked to renew your tax credits after the end of each tax year. A tax year runs from 6 April one year to 5 April the next. You need to renew to make sure:

  • you have been paid the right amount of tax credits for the last tax year
  • you get the right amount for the coming year

The Tax Credit Office will send you a renewal pack between April and June. The deadline for renewing is shown in your pack, but it's usually 31 July.

You need to check your details and tell the Tax Credit Office of any changes. The sooner you do this, the sooner they can make sure you get the money you're entitled to.

If you don't renew by the deadline:

  • your payments will stop
  • you will have to pay back any money from the last tax year that you weren't entitled to
  • you will have to pay back any money paid to you since the start of the new tax year

Provided by HM Revenue and Customs

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