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.
The changes that must be reported to HMRC are set out in Regulation 21 of SI.No.2014/2002.
They are also reproduced on the TC602SN checklist that is sent out with tax credit award notices.
Due to the Coronavirus pandemic, HMRC have introduced new rules for those whose hours and work are affected. Broadly speaking, those who have a temporary change to their hours or work due to coronavirus (including those on unpaid leave, furloughed and the self-employed) will be treated as working their previous hours until the Coronavirus Job Retention Scheme ends. There is no need to report this as a change to HMRC according to their guidance. Only if hours change permanently, someone is made redundant or they are self-employed and stop trading permanently is there a reportable change. See our WTC section for more information.
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.
Claimants reporting a change in their household from joint to single and vice versa and who consequently need to end their claim and submit a fresh one in their new capacity, should take note that now that Universal Credit is available across the UK, most people can no longer make a brand new claim for tax credits and they may need to claim Universal Credit (or pension credit) in place of a new tax credit claim.
Additionally, where a tax credit claimant has a change of circumstances and makes a claim for universal credit, for example they stop working and need to claim out of work support, they will also be expected to notify HMRC that they have stopped work, in the usual way even though the UC claim will prompt DWP to send a signal to HMRC to stop their tax credits award.
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. Due to the Coronavirus pandemic, HMRC have extended this time limit to three-months in certain cases. See below for more information. The only exception to this one month rule 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 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). Any overpayment is 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.
HMRC introduced new regulations that apply from 23 May 2020. Those who are ‘critical workers’ during the period 23 May 2020 to the end of the Coronavirus Job Retention Scheme will have 3 months (instead of 1 month) to notify HMRC of changes that decrease the amount of tax credits they are entitled to or mean they cease to be entitled to tax credits. The 3 months begins on the date on which the change of circumstances occurs.
They will also have 3 months (instead of 1 month) to notify changes which increase their maximum rate of tax credits.
The time limits for notification in relation to the disability elements have also been extended for critical workers. Usually, claimants must notify HMRC within 1 month of the award of their qualifying disability benefit. This has also been extended to 3 months.
For these purposes, a critical worker means:
- in England in the version of the document entitled “Guidance for schools, childcare providers, colleagues, local authorities in England on maintaining educational provision” published by the Cabinet Office and the Department for Education on 14 May 2020;
- in Scotland in the document entitled “Coronavirus (COVID-19): school and early learning closures – guidance about key workers and vulnerable children” published on 31 March 2020;
- in Wales in the version of the document entitled “Coronavirus key (critical) workers” published on 18 May 2020; and
- in Northern Ireland in the document entitled “General Guidance on COVID-19 for schools”.
When a tax credit claimant dies, or a child or qualifying young person who is included in a tax credit claim dies, this is a change of circumstances which must be notified to HMRC within 1 month (if the parent/carer is a criticial worker, from 23 May 2020 this is temporarily extended to 3 months – see above).
Where a child or qualifying young person included in a claim dies, any child tax credit for them continues for 8 weeks from the date of death or, until the young person would have reached age 20 if that date is sooner. Where a claimant dies who was part of a joint claim, the surviving partner will need to report the change to HMRC and the joint claim will end. The surviving partner will need to re-claim to continue to receive tax credits. However, now that UC is available across the UK, most people can no longer make a brand new claim for tax credits and will need to claim UC or pension credit (depending on their age) instead. You can read more in our UC section.
For more information, please see our Bereavement section.
Last reviewed/updated 26 May 2020