Tax Credits: Claims finishing

Once the tax year ends, the claim for the year just ended can be finalised. The process that does this is often called ‘renewals’. The function of renewals is two-fold – to finalise the claim for the year just ended and to make a claim for the new tax year (if appropriate).

Section 17 notices

The first step in the process involves HMRC issuing a notice under Section 17 Tax Credits Act 2002. A claimant may receive more than one Section 17 notice as one is issued for each claim in the tax year. So, for example, if a claimant was single for six months and then ended that claim and made a joint claim with their new partner, they would receive two Section 17 notices, one for each claim. Similarly if a Working Tax Credit (WTC) only claimant stopped work part way through the year and then went back into work three months later and submitted a new claim, they too would receive two notices. This is unlikely to happen now that HMRC state it is no longer possible to make brand new claims for tax credits. The only exception to this is for certain people who are granted refugee status.

The Section 17 notices either:

The Section 17 notice is more commonly known as the TC603 or renewal notice. The circumstances of the claimant will dictate what combination of renewal forms are received.

In brief:

A modified version of a s17 notice is also issued under the in-year finalisation process. This applies to people who have claimed universal credit (UC) in the same tax year that they had a claim for tax credits and to people whose tax credit award is terminated in line with their migration notice (from 6 April 2024) or their tax credits closure notice (from 8 June 2024). See Universal Credit - Finalising Tax Credits for more information.

If the claim is a joint one, the household should only receive one set of forms (rather than one to each claimant as previously). The exception to this is if a joint claim ceased during the tax year, before the award is finalised. If so, both claimants will receive a set of forms for completion. This is because once the claimants are no longer a couple, they cannot complete the form, nor renew, on behalf of each other.

More information about the process can be found in the renewals section.

Section 18 notices

Once the claimant completes their renewals declaration (or for auto-renewal cases, is treated as completing their declaration), HMRC will then be in a position to issue a Section 18 decision which is the final decision for the tax year just ended. If a claim has been auto-renewed, the section 17 notice acts as the final decision notice and, assuming all of the details are correct, finalisation automatically takes usually after 31 July deadline.

Between receiving the renewal documents and finalising the claim, HMRC may carry out additional compliance checks.

Decisions taken as a result of a compliance investigation may affect both the initial award for the new tax year, and the final decision for the tax year just ended. If you think your client has received an incorrect decision, you can appeal it. You can find out more about compliance checks in our dealing with mistake and fraud section.

As a result of this finalisation the claimant should receive a final award notice for the tax year just ended and an initial award notice for the new (current) tax year. Both of these notices carry a right of appeal.

Once a Section 18 decision has been made, it can only be changed in very specific circumstances. We list these in full in the claims changing section. In brief they are where there is a successful appeal, as a result of an enquiry, as a result of discovery under Section 20 Tax Credits Act 2002 or where there has been official error under Section 21 Tax Credits Act 2002, or, in relation to backdating of disability elements, varied under 21C Tax Credits Act 2002. It can also be changed if the claimant reports an error or further change or additional information before 31 July deadline.

The same principles apply to a Section 18 decision which is made by HMRC under the in-year finalisation process.

Claims finishing mid-year (no UC claim, no migration notice issued)

Claims can also end mid way through a tax year for a variety of reasons. Once a person’s entitlement ceases, their claim will end. For example, their claim will end if their working hours fall below the required number, the claim changes from being single to joint and vice versa (for example, if they move in with a partner) or, in a CTC only claim, if they are no longer responsible for a child or qualifying young person.

In some cases, claims can continue for a period of time after the change. For working tax credit, this is called the ‘four week run-on’. 

When a claim ends mid-year, payments will cease (subject to the four-week run-on (if applicable) but the claimant will still go through the ‘renewals’ process. This will usually take place following the end of the tax year. In cases where a claim has already ended during the tax year, provided the claimant does not claim UC in the same tax year and has not been issued with a migration notice or tax credit closure notice, there won’t be a renewal as such (although it is still referred to as the renewals process) but they will receive the same forms in order to finalise their claim for the period of the their claim in the tax year just ended.

Moving to Universal Credit or pension credit

Universal Credit (UC), is gradually replacing working tax credit and child tax credit. Most existing tax credit claimants are expected to receive their migration notices or tax credit closure notices at some point during 2024 and under current plans tax credit payments will end for everyone on 5 April 2025.

Outside the managed move tax credit claimants can also move to UC if:

Where a tax credit claim ends and UC is claimed in the same tax year or they are issued with a migration notice or tax credit closure notice, the normal renewals/finalisation process will not apply for the year in which tax credits terminate and the claimant will instead follow an in-year finalisation process. This means that after they claim UC or pension credit or once the deadline in their migration notice or tax credits closure is reached, DWP will notify HMRC to start the in-year finalisation process. The claimant will receive a notice asking them to confirm their income from April to the date the tax credit claim ended and that will be finalised. Under the normal process outlined above, this would not happen until after the tax year ends. However, if they had a tax credit award which ran up to 5 April, they may be required to follow the normal process in respect of the tax year just ended, so they may receive a normal ‘renewals’ notice as well as an in-year finalisation notice at the same time.   

Some people will be asked to move from tax credits to pension credit instead of universal credit. This will be done by way of a tax credit closure notice. Where this happens, in-year finalisation will be used to finalise the year in which tax credits terminate.  

You can find out more information about this in our UC section.

Last reviewed/updated 2 May 2023