See our making a claim section for more information about this. The legislation Regulation 6 of SI. This will be for the full tax year if the person has not claimed UC, or up until the day before the UC award starts if they have already claimed. If the tax credit claimant cannot show they had good cause for their late renewal, they will not be able to make a brand new claim for tax credits unless they fall into one of the very narrow exceptions.
You can read more about UC in the UC section. If the claim cannot be restored because there was no good cause or if good cause was present the renewal was not done before the 31st January , all provisional payments paid from 6 April will be treated as overpaid.
As mentioned above, it is vital to return renewal papers when required to do so. Claimants should particularly beware of using non-renewal as a tool to pull out of the tax credits system unless they have been invited to do so by letter from HMRC. In addition they will no longer be able to repay any overpayment by reduction of an ongoing award, as there will be no ongoing award to reduce. Instead direct recovery will be commenced. Most people will no longer be able to make a subsequent brand new claim for tax credits and will be expected to claim UC or pension credit instead.
As noted above, dissatisfaction with the system has led some claimants to refrain from completing their renewal papers. This has also happened where people have had a change in circumstances and thought they were no longer entitled to tax credits. The consequence of not returning the forms is set out above, and generally means that all payments between April and the date HMRC terminate the claim for failure to complete the renewals process become overpaid.
Additionally, in areas where the UC full service is available, most people cannot make a fresh claim for tax credits there are some exceptions because they have been replaced by UC. See our tax credits and UC section for more information. In April , HMRC introduced rules to allow claimants to withdraw from the system by only finalising their previous year claim and not renewing their claim for the current tax year.
In effect this means that you must let HMRC know before 6 April that you wish to withdraw your claim for the next year, otherwise you may be overpaid. After the renewals process has been completed, you will not be able to withdraw until the next tax year.
During the renewals process, withdrawal may mean you have to pay back anything received from 6 April. In addition to the clawback of all provisional payments made to date, there may be financial penalties for not responding to a renewal notice, or for giving the wrong information in response to it.
More information about penalties can be found in our ' penalties and interest ' section. Universal Credit, when fully implemented, will replace working tax credit and child tax credit. Existing claimants will be moved over manage-migrated from tax credits to UC over the next few years.
The finalisation process for claimants who are moving to UC is different to the process for people while they remain in tax credits. In the first few years of UC, and while claimant numbers were very low, HMRC paused issuing In-year finalisation paperwork for tax credit claimants who had moved to UC during the tax year.
From April onwards, there is no pause and so in-year finalisation and standard renewal exercises both run at the same time. In cases where a tax credit claimant has both in-year finalisation and standard renewal paperwork and declarations to complete, they can both be done at the same time, although claimants cannot complete their in-year finalisation paperwork online.
HMRC expect most people who receive in-year finalisation paperwork during the renewal period to have their in-year finalisation auto-finalised to reduce confusion. The DTO should then assess the case based on the information received or by contacting the claimant for further information. Any letter sent to the claimant should include a phone number for the DTO dealing with the case. The claimant should be informed by letter of the outcome, regardless of whether the decision is to temporarily suspend recovery or to remit the overpayment in full.
The legislation states that in this respect tax credit overpayments are to be treated the same as underpayments of tax. However, they are continuing to use it in cases where it is unlikely the person will be moving to UC - for example because they are over state pension age and a single claimant. HMRC's tax credit operations is responsible for ongoing recovery cases. Ongoing recovery is used where there is an ongoing claim still in payment following the claim which gave rise to the overpayment.
In the legislation, there are certain limits on the amount by which payments of tax credits can be reduced in order to recover an overpayment which arose in the previous year cross-year overpayment. Those limits depend upon household income. From April , the limits are as follows:. This could be a current year estimated figure or the previous year income figure. This may not be the same figure as the claim is based on. Sometimes HMRC adjust an award during the award period to try to prevent or reduce an overpayment from accruing by the end of the tax year.
Potential overpayments that are identified during the award period in this way are loosely termed in-year overpayments. In such cases, the limits above should also generally apply. This is to prevent a build-up of overpayments by the end of the year. Previously, HMRC continued to make payments to claimants in this situation unless they specifically asked HMRC not to all of which became recoverable overpayments at the end of the year.
Ongoing recovery of old tax credits debt cross-claim recovery. This change was introduced from October Essentially, it means that any households with outstanding overpayments from ended claims that include the same household member s will have those old debts recovered from the new ongoing award. Cross claim recovery will only take place when there is a suitable ongoing claim. This is one where:. Where an old debt is already being repaid directly, it will not be included in this ongoing recovery.
Where there are a number of old overpayments from different years, awards or households, these will all be moved to the ongoing award and collated as one single overpayment amount.
But if the ongoing award ends before the total overpayment is repaid, the outstanding debts will be returned to their original awards. HMRC have produced a more detailed note about recovering old tax credits from ongoing awards, including full details of how the payments will be reconciled.
More information can also be found in the Tax Credits Technical Manual. Financial hardship in ongoing recovery cases. In certain circumstances, HMRC will agree to reduce the recovery percentages from the figures set out above. Any financial hardship in ongoing recovery cases is dealt with by HMRC's tax credit operational processing teams.
This form is used to ask HMRC to reduce recovery rate where it is causing financial difficulty. The form asks for various details about the claimant and their partner, their household and their income and expenditure. Claimants will need to log in to their personal tax account. To do this they will need to use the Government Gateway for verification. If they do not have an account, they can set one-up and if they do have an account they will need to sign-in.
Each time someone signs in to their PTA, they will need their mobile phone to receive an access code. Once in the PTA, claimants will need to click on tax credits and on the first page there is a list of tax credit forms that can be filled in and submitted through the PTA. After the form has been submitted, it can be tracked via the PTA which is again accessed from the account home page.
The first step is for the claimant to contact the tax credit helpline to ask that the recovery percentage is reduced. Once a referral is received by the hardship team, they will send out an income and expenditure form TC Once the form is returned, HMRC will compare the income and expenditure figures against figures they hold for various household expenses and make a decision.
HMRC aim to make a decision within 2 working days of the form being returned, however sometimes HMRC may contact the claimant by phone or letter if no telephone number is held for more information or evidence before making a decision.
Any arrangement will only last until the end of the current tax year. It appears there is no way to challenge a refusal to reduce the percentage recovery rate, but a fresh hardship request can be made. If the cases warrants it, a complaint could also be made.
The law says that an overpayment debt for a couple can be collected by HMRC in full but only once! The stated policy of HMRC where this has happened following a household breakdown is to write to both members of the former couple making every effort to trace any former partner for whom they do not have an up-to-date address. If the claimant believes that there should be a difference in what they and their former partner should pay, then HMRC will take into account the circumstances of both of them and may ask each of them to pay a different amount, or one of them to pay the full amount.
Alternatively, they can agree between them to pay different amounts and inform HMRC of this decision. This often meant the mother with care of the children had to repay the whole joint overpayment debt where the absent partner was difficult to trace.
Instead they will pursue the other partner, and if they cannot collect the money will not go back to the engaging partner to collect it. It is important to note that the law still allows HMRC to pursue either partner for the full amount of the joint debt. Also, this process is not well advertised by HMRC, so you should ensure that you ask Debt Management and Banking if you think it applies to your client.
Notional entitlement Sometimes known as notional offsetting. Sometimes, tax credit claimants who form a couple or who become single, either because they separate or because one partner dies, are slow in reporting the change to HMRC. Yet in many cases, if they had acted promptly they would have continued to be entitled to tax credits, albeit in a different capacity.
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Hide this message. Home Benefits Manage an existing benefit, payment or claim. How to renew tax credits. Hide this message. Home Benefits Manage an existing benefit, payment or claim. Manage your tax credits. You can use any 2 of the following: your tax credit claim details your P60 one of your 3 most recent payslips your UK passport details information held on your credit file such as loans, credit cards or mortgages details from your Self Assessment tax return in the last 3 years your Northern Ireland driving licence Signing in will also activate your personal tax account - you can use this to check and manage your HMRC records.
Renewing your tax credits You can no longer renew your tax credits online for the to tax year. Related content Tax credits calculator Report changes that affect your tax credits. Explore the topic Manage an existing benefit, payment or claim Tax credits.
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