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.
Time limit for reporting changes
Broadly speaking, the changes that must be reported to HMRC and within a timeframe are those which either reduce the maximum tax credit award (for example the loss or reduction of an element) or which bring a tax credit award to an end (for example a change in the household status from joint to single or vice versa, in WTC only, no longer meeting the minimum working hours requirement or, in CTC only, the last or only child in a claim leaving full-time non-advanced education or leaving the household – these examples are illustrative only and not exhaustive).
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 gov.uk.
They are also reproduced on the TC602SN checklist that is sent out with tax credit award notices.
Due to the Coronavirus pandemic, HMRC introduced temporary rules for those whose hours and work were affected. The temporary rules were in place until 30 September 2021, with various short-term run-on concessions. See our tax credit and coronavirus page 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.
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. Due to the Coronavirus pandemic, HMRC temporarily extended this time limit to three-months for critical workers in certain cases until 30 September 2021. See our tax credit and coronavirus page 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.
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 was a critical worker, from 23 May 2020 to 30 September 2021 this was 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 rmake a new claim for support. 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 25 April 2022