Millions of people benefit from tax credits, which help those on lower salaries.
If you are one of them, it’s important to get your skates on to ensure you renew before the end of the month as July 31st marks the tax credits renewal deadline.
Fail to do so and not only will your payments stop, but the taxman may also chase you to pay back some of the money you’ve received over the last couple of months.
Am I entitled to tax credits?
Tax credits come in two main forms: Working tax credit and child tax credit.
Child tax credit is available if you’re responsible for children under the age of 16, or up to the age of 20 if they are in eligible education or training.
Child tax credit is made up of two parts – the family element and the child element – and the amount you get will depend on when you first made a claim and when your children were born.
The family element is currently worth up to £545 a year, while the child element is worth up to £2,780. Further payments of up to £4,600 are available if the child is disabled.
Working tax credit is on offer to people who work a certain number of hours a week and have an income below a certain level.
The basic amount is up to £1,960 a year, though you might get more or less than that depending on your circumstances.
You don’t need to have children in order to qualify either.
How do I renew my tax credits?
If you already receive tax credits, then you should have been sent a renewal pack by HM Revenue & Customs (HMRC). It’s crucial that you get in touch with the taxman as soon as possible if you haven’t received yours yet.
The pack will include an annual declaration which covers your income details for 2017/18. If you are claiming as a couple, then you will need to give details for both of you.
You’ll need to have some key documents to hand, including things like payslips, business accounts and figures for any childcare costs you’ve run up.
If you are self-employed and haven’t sorted your accounts yet, then you may not have the final figures for your income yet, so you can use estimates. However, you will need to provide the actual figures by the self assessment deadline of 31st January.
What happens if I miss the deadline?
If you don’t manage to complete your renewal by the end of the month, then it could cause some serious problems.
For starters, your payments will of course stop. However, you may also have to hand back the tax credits that you have received since the start of the tax year in April to HMRC.
What about universal credit?
Currently, if you are an existing tax credit claimant, you aren’t affected by universal credit, though from next July the Department for Work and Pensions (DWP) and HMRC are due to begin moving existing tax credit claimants over to universal credit.
That said, the switching process will also be a lengthy one, as it is not expected to be concluded until March 2023.
So until you hear anything from HMRC or DWP, you shouldn’t need to worry about your tax credits changing over to universal credit.