26 June 2024 , 15:20
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Thousands of people claiming benefits have been issued with an urgent warning they could lose money - or face a hefty fine. HM Revenue and Customs has sent letters to 730,000 telling them they must notify them of any changes in their living circumstances.
This could be anything from finding a new job, a new partner moving in or children leaving school or home. Anyone affected by any of these changes must tell the tax man if it could affect their claim.
People have just weeks to do it with the deadline set at July 31. Anyone who fails to tell them of any changes could lose tax credits leaving them with less money.
The tax credit system is due to be scrapped with people switching to Universal Credit next year with most already on the new benefit. However thousands remain on tax credits and must report any changes in their lives.
Andy Wood, tax expert from Tax Natives said: "If you are a tax credit claimant, you should inform HMRC of any changes in your circumstances, such as changes in living arrangements, childcare situations, or employment status.
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"Failure to do so could result in major financial consequences, such as loss of tax credits or fines of up to £300. Non-compliance with reporting requirements can have serious repercussions such as loss of tax credits, repayment demands, and even fines of up to £3000 if incorrect information is provided."
You must tell HMRC at once if your:
- Living circumstances change, for example you start or stop a relationship, move in with a new partner, get married or form a civil partnership, permanently separate or divorce
- Child or partner dies (you do not need to tell HMRC if you’ve already used the Tell Us Once service )
- Child stops going to childcare for four weeks or more when they would normally go
- Childcare costs stop, go down by £10 or more a week, or you start getting help with them
- Child leaves home, for example moves out or goes into care
- Child is taken into custody
- Child over 16 leaves approved education or training, or a careers service
- Childcare provider is no longer registered or approved
- Working hours fall below 30 hours a week (combined if you’re in a couple with children)
- Working hours fall below or go above the minimum required to qualify
You must also tell HMRC immediately if you:
- go abroad for 8 weeks or more
- leave the UK permanently or lose the right to reside in the UK
- start working for less than 16 hours while claiming childcare costs - except in certain situations
- have been on strike for more than 10 consecutive days
According to the HMRC anyone who fails to do so could face a big bill. It warned: "If you receive tax credits you’re not entitled to, you’ll need to repay the money. You may also have to pay a penalty."
It continued: "You must report these changes within 1 month. If you report changes as soon as they happen, you’re less likely to be paid the wrong amount.
"You could be fined up to £300 if you do not report certain changes within 1 month, and up to £3,000 if you give wrong information. If you estimated your income when you renewed your tax credits - for example because you’re self-employed - tell HMRC your actual income by 31 January."
Claimants should also tell HMRC as soon as possible of a number of other changes. You should tell HMRC as soon as you:
- have any change in income (report this immediately if it goes up or down by £2,500 or more)
- increase your working hours to 30 hours or more a week (combined if you’re in a couple with children)
- have a baby or take responsibility for another child
- start or stop claiming benefits for yourself or a family member, or those benefits change
- start or stop having a disability that puts you at a disadvantage in getting a job
- get certification that your child is blind or their certification ends
- start paying for registered or approved childcare
- stop getting help with childcare costs
It said: "You should report these changes within 1 month to make sure you get everything you’re entitled to. Payments cannot usually be backdated any further than this."
People claiming the benefits should have received a renewals pack by June 15. If you have not received one you should contact HMRC to check what is wrong and avoid potential delays.
Some people might have their claim automatically renewed. Andy Wood said: "If you’re eligible for automatic renewal, check for the specified code 'TC 603 R' and accompanying letter in the renewal pack. This streamlines the process and minimises the burden, ensuring continued receipt of tax credits without unnecessary delays. Your tax credits will be automatically renewed if your renewal form has the code 'TC 603 R'."
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He added: "You are required to review your renewal pack and report any changes to HMRC by the end of July. These changes include living arrangements, childcare situations, and employment status. For instance, if childcare costs decrease by £10 or more per week, or working hours fall below 30 hours per week (combined for couples with children), report it to maintain the accuracy of the tax credit claim."