19 April 2012
2012 renewals round begins – sample tax credits renewal notices available
Each tax credit claim lasts for a maximum of one tax year. A new claim must be made each year, however it is not necessary to fill in a new TC600 claim form each year.
HMRC will normally send a set of papers (normally between April and June each year), and so long as the information requested is given within the time limits requested, the legislation treats the claim as having being made for the new tax year in most cases.
For the majority of claimants the process aims to do two things: to reconcile entitlement for the year just gone (2011/12) with what has been paid; and to renew the tax credit claim for the coming year (2012/13).
Although the process is often referred to as the ‘renewals process’, not everyone will want or need to renew their claim. Some people, for example where a joint claim ended in the tax year just ended, will need to finalise the old claim but will not be making a new claim. In this case they are not renewing merely finalising the old claim.
The renewal packs
Most claimants receive renewal packs which consist of:
- Form TC603R (annual review) plus, in many cases,
- Form TC603D (annual declaration)
If the claimant is an auto-renewal case, they will receive TC603R (annual review only). If their personal circumstances have not changed and their income is within a prescribed range so that their award will remain the same, nothing further needs to be done (no reply required).
- Sample Renewal notice (auto-renewal cases) – Spring 2012
- TC603R Notes - Renewal notice notes (auto-renewal cases)
You can find further details of the auto-renewal process and who falls into the auto-renewal category in our renewals section.
If the claimant is a reply required case (i.e. not an auto-renewal case) they will receive both forms. They must reply to the TC603R and complete and return TC603D with details of their income for the year just ended (2011/12). This can be done by returning the form or contacting the tax credits helpline.
- Sample Renewal notice (reply required cases) – Spring 2012
- TC603RD Notes - Renewal pack notes (reply required cases)
You can find further details of the reply required process and who falls into the reply required category in our renewals section.
The most important thing to note is that the renewals deadline this year is 31stJuly 2012.
HMRC will undertake its annual media campaign between April and July 2012 targeting tax credit claimants to inform them of the need to renew their tax credit claims.
Last year, the tax credits helpline was extremely busy and many claimants had a difficult time getting through. Renewals can be completed over the phone or by returning the forms sent out by HMRC. Complications can arise if the deadline is missed, therefore we recommend that claimants who are finding it difficult to renew over the phone should send back the paper forms to meet the 31stJuly deadline. We suggest that where possible claimants make a copy of the form before sending it back and also use a recorded delivery postal service so that they have proof of returning it before the deadline.
The renewals process
The claim for the current year (2011/12) was based initially on the claimant’s circumstances for that year, and their income for the previous year (2010/11). One of the functions of the renewal process is to establish their income for the current year (2011/12), and to review any changes of personal circumstances during it, so that their final entitlement for that year can be ascertained.
Having established their income for the current year (2011/12), it is used, together with their latest set of personal circumstances, to set the initial award for the coming year (2012/13).
So we have a three-year rolling programme. The initial claim for 2011/12 was based on income for 2010/11. The renewal process for 2011/12 compares the actual income of 2011/12 with that for 2010/11 to fix the final entitlement for 2011/12, and uses the income figure for 2011/12 to fix the initial award for 2012/13.
The comparison works like this for finalising 2011/2012 claims (concentrating only on income and leaving aside changes in entitlement which are due to changes in circumstances):
- If 2011/12 income is less than or equal to 2010/11 income, the final award is based on 2011/12 income and there is likely to be an underpayment.
- If 2011/12 income is greater than 2010/11 income by £10,000 or less, the final award (like the initial award) is based on 2010/11 income and there is likely to be no change in the finalised award. Thus an increase in income of £10,000 or less is disregarded (hence the £10,000 is commonly known as 'the disregard').
- If 2011/12 income is greater than 2010/11 income by more than £10,000 the final award is based on 2011/12 income less £10,000 and there is likely to be an overpayment.
A new disregard for income falls has been introduced from 6 April 2012. This means that finalisation of 2012-2013 claims (which will take place in Summer 2013) will be done using additional rules (disregards) when comparing current year and previous year incomes. You can find comprehensive information about the income disregards, including the new disregard for falls in income in our understanding the disregard section. You can find details of all the tax credits changes from April 2012 in our recent blog post.
We have written a detailed guide about the renewals process which explains what packs claimants should receive, what they need to do and other points about the process that advisers should be aware such as what to do if your client has missed the deadline or wants to withdraw from the system.
HMRC has produced a help-sheet about renewals aimed at advisers. It outlines the renewals process and some of the issues that advisers may come across (although they haven’t updated it for 2012). They also have information about the process on their website aimed at claimants.
You can find the full range of 2012 tax credits leaflets in our current leaflets section. You can find earlier versions of these leaflets in our archived leaflets section. The 2012 forms, notices and checklists can be found in our current forms section with earlier versions available in our archived forms section (helpful in understanding what information was available at a specific point in time when dealing with disputes or appeals for earlier years).
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