5 December 2016

Child Tax Credit – backdating the disability and severe disability rates to April 2016

In the Autumn Statement on 23 November 2016, the Chancellor announced that HMRC would be making backdated payments for people who could have been getting the higher rate of child element in their tax credit award because they have a disabled child who meets the qualifying conditions.

The most common way to qualify for these higher payments is through receipt of a disability benefit such as disability living allowance or personal independence payment. Although it is the claimant’s responsibility to tell HMRC that they receive a disability benefit for their child, HMRC have historically received information directly from the Department for Work and Pensions (DWP) about these disability benefits. This allowed HMRC to update the tax credits award automatically with the extra child disability amounts, even where claimants did not notify them about the benefit.

There was a gap in the data-feed between DWP and HMRC from 2011 to 2014 which meant that HMRC could not automatically update awards. The result has been that around 28,000 families in 2016/17 are not receiving the higher level of CTC that they could be entitled to because of their child’s disability.

The announcement in the Autumn Statement confirms that, where the qualifying disability benefit is being paid by DWP, HMRC will award the extra child disability rates from 6 April 2016 without claimants needing to contact them.

HMRC have said they plan to start amending customer’s awards in the next couple of weeks with the majority being completed by the end of January 2017 (although some complex cases may take a little longer).  Once HMRC has amended an award, HMRC will send the claimant a standard revised decision notice and also a separate letter explaining what they have done and why.