Check your tax credits and renew, or you could be out of pocket
Double check details or you could end up owing money back. There has been another drop in the Tax Credit Disregard.
Almost 6 million Annual Declaration packs have been sent out by HMRC, requiring people to double check that they are receiving accurate tax credits. The deadline for the return of the tax credit renewal pack is the 31st of July, but HMRC are encouraging people to complete their renewals online. Once you receive your renewal pack you can complete the online renewal process. HMRC are asking people to double check that the information in the pack is correct. Any changes, even small ones, to working hours, pay rates, childcare costs, etc can effect your tax credits.
There has been another drop in the Tax Credit Disregard this year, now down from £5,000 to £2,500, which was it's original amount back in the 2005. As the Tax Credit System pays credits based on the present tax year's income, rather than the previous years, entitlement can only be established at the end of the tax year. HMRC assess ones income at the end of the tax year, and if any increase is within £2,500 of what it was the previous year, then there are no changes to your Tax Credits. So, the first £2,500 of any income increase is disregarded when calculating your Tax Credits (2014/15).
In the last 3 tax years the Disregard has dropped from £25,000 to £2,500. This significant drop may find many individuals dealing with the messy problem of having to pay back over payments of tax credits. In an effort to avoid tax credit over payments, HMRC are advising all those in receipt of Tax Credits to carefully check the Annual Declaration and make their return on time.
It is also advisable that those in receipt of Tax Credits update HMRC of changes to working hours, childcare costs, living arrangements or income, as they happen during the year. This prompt reporting of changes in income should mean you are in receipt of the correct Tax Credits, and avoid over, or indeed under, payments.
Everyone should have received their tax credit renewal pack by the 28th of this month (June 2016). If you did not receive yours contact the tax credit helpline on 0345 300 3900.
For completing your renewal, here is the online link.