Tax Credits: Changes that must be reported to HMRC

Certain changes of circumstances must be notified to HMRC within a specified time period. This section explains the changes that must be reported and when. It may be desirable to report other changes, although not mandatory. These are explained in the other changes part of this section.

Changes that must be reported

The changes that must be reported to HMRC are set out in Regulation 21 of SI.No.2014/2002.

HMRC have set out their interpretation of Regulation 21 in their tax credit technical manual and also on the main tax credit website for claimants.

They are also reproduced on the TC602SN checklist that is sent out with tax credit award notices.

From 6 April 2012, the Tax Credits (Miscellaneous Amendments) Regulations 2012 added a further change that must be reported to HMRC. This was introduced to reflect the change to the working hours requirement for certain couples with children. Where one or both members of a couple who are subject to the 24 hour rule reduce their hours or cease to work so that they no longer meet the condition that between them they work 24 hours with at least one person working at least 16 hours a week, there is a change of circumstances that must be reported.

Time limit for reporting changes

Changes that must be reported to HMRC must be reported within one month from the date the change happened, or if later, the date the claimant became aware of the change. The only exception to this is where a young person ceases to be a ‘qualifying young person’ for tax credit purposes. In that instance it must be reported within one month from the date the change happened.

Prior to 06 April 2007 the length of time allowed for claimants to report those obligatory changes of circumstances was three months. The change highlighted the many difficulties inherent in imposing a time limit for notifying such changes, for example household changes when it is sometimes not clear whether or precisely when a partner has left permanently.

If you a claimant does not find out about the change in circumstances until after it has happened, the one-month time limit starts from the point at which they first become aware of it (with the exception for a young person ceasing to be a qualifying young person). However, any overpayment will be calculated from the actual date of change as the one month limit is relevant only from a penalty point of view. This is not often communicated adequately to claimants who often believe they have one month to inform HMRC without any overpayment accruing.

Updated 4 April 2012
Last reviewed 28 June 2016