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17 Jul 2020

Just two weeks left to renew tax credits for 2020-21: what you need to know

Missing the 31 July deadline could mean missing your payment

More than 2.3 million families who currently claim working tax credit, child tax credit, or both, have two weeks left to check their renewal packs., or risk losing out on thousands of pounds.

Tax credits are means-tested benefits that can provide extra money for disabled workers, those on low incomes and those responsible for children.

But many people who already receive payments are required to renew their application once a year to confirm their details are still correct. If you don't do this on time - by 31 July - your payments may stop.

Here, Which? explains who is eligible to receive tax credits, and how to successfully renew your application.

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How to renew your tax credits

HMRC sends out renewal packs to those who receive tax credits every year between April and July. Some people will need to take action with their renewal pack, and some won't.

If your renewal pack says 'check now' on it, all you'll need to do is read through the information to make sure it's correct. Unless something is wrong, you don't need to do anything else, and your tax credits will be renewed automatically.

If your renewal pack has a red line across the front page and says 'reply now', then you'll need to make sure you renew your application by 31 July 2020 to continue receiving payments.

In order to renew your tax credit application, you'll need the following:

  • your renewal pack - if you haven't received this yet, contact HMRC
  • your National Insurance number
  • details about any changes to your circumstances (if there have been any)
  • details about your total income for the past tax year. If you're applying as a couple with your partner, you'll need their total income, too.

If you don't have accurate figures for your earnings, you can submit estimated figures. You'll then have until 31 January 2021 to provide the confirmed information.

You can send the forms back in the post, renew over the phone by calling HMRC, or you can do it online, but you'll need to have set up a Government Gateway account for this.

What happens if you miss the 31 July deadline?

Missing the deadline to renew on 31 July will mean your tax credit payments will stop.

As the renewal pack is confirming your information for the 2020-21 tax year, which began on 6 April 2020, HMRC may also recover payments you've already received between April and July if it believes you weren't entitled to receive them.

If you can show a 'good cause' for missing the deadline, you may be given until 31 January 2021 to confirm your details. However, HMRC doesn't have to give this option, and it's decided on a case-by-case basis.

To avoid any doubt, it's best to confirm your renewal as soon as possible. If you know that you're unlikely to do this by the deadline, contact HMRC as soon as you can.

What if my circumstances have changed?

If your circumstances have changed since last year, you shouldn't wait until renewing your tax credits to let HMRC know.

In fact, it's a legal requirement to keep HMRC up to date if there are any changes to your income or family situation. You must contact it within a month in the following instances:

  • your relationship changes - including if you get married, divorced or move in with a partner
  • your job changes - including if you stop working, or your hours change
  • your childcare costs change - for instance, if your child moves out.

Failure to let HMRC know within a month could result in a £300 fine. If you knowingly supply incorrect information, you could be fined up to £3,000, and HMRC can make you repay any money you weren't entitled to receive.

Who is eligible to receive tax credits?

Working tax credit is for low-income workers aged 25 and over; those aged 16-24 can also claim if they have a child or a qualifying disability. You must work a certain number of hours per week to qualify, which varies depending on your age and personal circumstances.

Child tax credit is for people who are responsible for at least one child under the age of 16, or under the age of 20 and enrolled in eligible training or education. You don't need to be in work to claim.

Both types of benefit have different elements, which you can layer up depending on your circumstances.

For more information, see our full guides on working tax credit and child tax credit.

If you claim Universal Credit

Universal Credit is the newer benefits system that's still in the process of being rolled out across the UK. It will replace some existing benefits, including working tax credit and child tax credit.

If you already receive Universal Credit, you won't be able to make a claim for working tax credit or child tax credit, as these payments will have been incorporated into your Universal Credit payment.