Tax Credits: Backdating

Now that Universal Credit is available across the UK, HMRC state that it is no longer possible for anyone to make a brand new claim for tax credits. A recent court case has created an ‘exception’ to this position for asylum seekers who are granted refugee status in certain circumstances. This page explains when new claims are possible in those circumstances as well as the backdating rules for existing claimants.

Changes of circumstances and backdating

Changes of circumstances which increase an award can be backdated up to 1 month as a standard rule. Prior to 6 April 2012, the standard backdating period for changes of circumstances was 3 months. Changes of circumstances which reduce an award are generally backdated to the date the change took place or the beginning of the tax year, whichever is the earlier (but if the change took place in a previous tax year the case may be subject to enquiry which would allow HMRC to change the previous year decision. HMRC also have other powers to go further back on certain claims). Changes of circumstances involving the addition of any of the tax credit disability elements can be subject to longer backdating rules.

As one of the measures in respect of the coronavirus pandemic, temporary rules allowed changes of circumstances to be backdated up to 3 months for critical workers until 30 September 2021.

Backdating of disability elements for existing claimants

Backdating is possible by more than 1 month where entitlement to one of the disability elements is dependent upon an award of a qualifying benefit. The rules for backdating disability elements changed on 6 April 2009 and further changes were made in January 2021 to clarify the rules.

Prior to 6 April 2009, if there was an ongoing tax credits award, the claimant had to notify HMRC both when they applied for the qualifying benefit and then again within 3 months of it being awarded in order to receive backdating of more than 3 months.

From 6 April 2009, providing the claimant notifies HMRC within 1 month (3 months prior to 6 April 2012) of being awarded the qualifying benefit, the rules allow them to receive full backdating. There is no need to tell HMRC at the point when they apply for the disability benefit but, to have a disability element added to an existing award, they must tell HMRC within 1 month of when the disability benefit is awarded.

Example of the rules (since 6 April 2009)

Sandra already claims child tax credit for her daughter, Amy. If Sandra applies for Disability Living Allowance for Amy in April 2020, and it is not awarded until October 2022 providing Sandra tells HMRC of the award of DLA within 1 month she can receive backdating of the disability element to April 2020. See our understanding disability section for more detail about longer backdating.

She is not required to tell HMRC in April 2020 when she applies for DLA.

If a claimant has moved to UC, but is then awarded a qualifying disability benefit, they can contact HMRC and receive backdating for the period that they were on tax credits.

Example

Jemma applied for DLA for her son in May 2020. DWP say she is not entitled and she appeals. While waiting for her appeal, she claims UC in May 2022. Her tax credits end the day before her UC claim. In November 2022, she is successful at appeal and her son is awarded DLA from May 2020. As long as Jemma contacts HMRC within one month of the DLA award, she should receive backdated child tax credit covering the period May 2020 to May 2022.

Backdating for those obtaining refugee status

When it was possible to make brand new tax credit claims, if a person had claimed asylum as a refugee and was then awarded refugee status or they were granted leave to remain in the UK by the Secretary of State having been relocated to the UK pursuant to arrangements made by the Secretary of State under section 67 of the Immigration Act 2016 then, providing they applied for tax credits within one month of receiving notification of that refugee status or section 67 leave, they were treated as if they made their tax credits claim from the original date they claimed asylum. Prior to 6 April 2012, refugees had 3 months from being awarded refugee status to inform HMRC and receive longer backdating.

Example

Faizah claimed asylum as a refugee on 12th May 2012 and was granted refugee status on 10th April 2016. She applied for tax credits on 8th May 2016 (within one month). The claim for tax credits was treated as being made on the date she claimed asylum (12th May 2012).

It is important to note that any backdated amount due is reduced by any support received under the Immigration and Asylum Act 1999 (such as NASS payments) unless any DWP backdating has already been reduced to take these payments into account.

Since the introduction of universal credit, HMRC have gradually reduced the number of people allowed to make a brand new claim for tax credits and the way the rules have been written broadly means that if it was possible to make a claim for universal credit, then it is not possible to make a brand new claim for tax credits (there are separate rules for people in a joint claim where both have reached their state pension age and a limited number of mixed age couples).

The exceptions to this rule have been steadily removed and HMRC now state that it is no longer possible for anyone to make a brand new claim for tax credits. HMRC stated that this meant people granted refugee status could no longer access backdated tax credits (as outlined above) and they would have to claim universal credit instead (which does not have similar backdating provisions for those granted refugee status). This was the case even if the application for asylum was made before HMRC stopped allowing people to make new tax credit claims.

HMRC’s position was challenged in the Courts and a recent decision by the Court of Appeal (DK [2022] EWCA Civ 120) considered this issue. The court decided that the individual in the case, who was granted refugee status after HMRC said no new claims for tax credits were possible, could claim backdated child tax credit covering a period before they claimed universal credit. This was because on the date they claimed asylum it was not possible for them to claim universal credit.

If someone has been granted refugee status and their claim for asylum was made at a time when it was not possible for them to make a claim for universal credit, they should seek specialist welfare rights advice as soon as possible (in order to comply with the 1 month time limit for making a tax credit claim following notification of refugee status) or contact HMRC tax credit helpline. If you are an adviser with a client in this position, you should contact HMRC tax credits helpline for advice on how to make a claim in these circumstances. This also applies to those who made claims for Section 67 leave at a time when it was not possible to claim universal credit.

Last reviewed/updated 20 May 2022