Anyone claiming working or child tax credits will shortly (or you may have already) receive a renewal pack. The forms are to help HMRC check that you were paid the right amount of money in the year ended 5 April 2010 and that you are on track to receive the right amount in the current year.
Your renewal pack may be made up of just an Annual Review notice or both and Annual Review notice and an Annual Declaration.
The Annual Review notice
The Annual Review notice gives details of the tax credits you received during the year and your personal circumstances. It also tells you how to renew your tax credits. You get an Annual Review notice only if either you just get the family element of Child Tax Credit or you claimed tax credits but didn't get them because your income is too high (a ‘nil award’). You should check that the personal circumstances you gave to the Tax Credit Office at the start of your award period are correct and that any changes that you have since reported are shown.
The Annual Declaration
The Annual Declaration asks you to provide details of your income for the tax year that started on 6 April 2009 and ended on 5 April 2010. You will need to work out your total income so that you can check if the income shown on the Annual Review notice is correct, and then correctly complete your Annual Declaration (if you were sent one).
There should be a working sheet in the notes sent with your renewal pack which you can use. Your adviser is also available to provide assistance if required. Guidance on working out your total income is also available on the HMRC website.
When to renew
If you received both an Annual Declaration form and an Annual Review notice then you should deal with the renewal as soon as possible but by 31 July deadline at the latest (unless your renewal pack states otherwise).
If you are unable to provide details of your actual income for the last tax year prior to the deadline you should renew using an estimate of your income which is as accurate as possible and make it clear that the income is based on an estimate. If you’ve given details of estimated income then you are usually required to provide actual amounts by 31 January but check your Annual Review notice to see if you’ve been given a different date.
If the Tax Credit Office doesn’t hear from you by 31 July - or the deadline on your renewal pack - they will stop your tax credits payments and send you a statement showing you whether you’ve been paid too much, or not enough, tax credits. You then have a further 30 days to provide the information asked for. If you don’t provide the information within 30 days, you will usually have to make a new tax credits claim. You will also be asked to pay back any overpayments from the last tax year - and any payments made to you since 6 April.
If you just received an Annual Review notice, then you will only need to renew if the information in the notice has changed, or if anything is wrong, missing or incomplete, the deadline remaining as above.
Keeping your details up to date
Not doing so is the main reason that overpayments of tax credits arise. It is important that you notify HMRC of any changes to your personal circumstances as soon as they arise to avoid under or overpayments of your tax credits. A penalty could also be imposed.
Please see the HMRC website for a full list of the changes which should be reported. These can be reported by contacting the tax credit helpline.
I don’t claim tax credits
If you don’t currently claim tax credits because your income is too high, you may wish to consider making a protective claim in case your circumstances change, particularly if you are self employed and your profits fluctuate. Claims can only be backdated for three months and you could miss out. If you think this could apply to you, then please contact your adviser to discuss this further.
