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How to manage tax credits

Posted 16 November 2016

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Here’s how to make sure you’re managing your tax credits properly.


In today’s blog, we’re going to look into what you need to do to manage your tax credits. But first, a brief reminder of what they are, if you’re not too sure.

What are tax credits?

Tax credits are a type of benefit. They are available to certain people who are responsible for children and who are working, but earning a low income.

There are two types: child tax credits and working tax credits – in some circumstances you might be entitled to both of them. You don’t pay any tax on the money you get from tax credits but they are means tested, which means that your household income will be assessed to see whether you qualify to get them.

Tax credits can make life easier in households where money is tight, so why not see if you’re eligible or not? You can check on this Government page.

How do I manage my tax credits?

If you’re going to start receiving tax credits – or you’re getting them already – it’s a good idea to know how best to manage them.  

You can manage your tax credits online, through your personal Government Gateway account. You may already have one, or you can create one here.

You can use this Gateway to renew your tax credits, or to report any changes that might affect them.

Renewing your tax credits

In order to carry on receiving Tax Credits, you need to renew them once a year. The deadline for 2015-2016 has already passed – if you’ve missed this deadline, then call the Tax Credit helpline.

Once you’ve renewed your tax credits, you should get a letter from HMRC within eight weeks, telling you how much you’re going to get.

What changes do I have to report?

Certain changes in your circumstances should be reported to the Tax Credit Office. These include changes to your living situation, for instance if a partner moves in, an ex moves out, or if you move in with anyone. You should also tell them if you get married, enter into a civil partnership, or get a divorce.

If your child leaves home for any reason or leaves education or training, this is something that the Tax office will need to know. If you suddenly find that your childcare costs have gone down because you’re getting help with them, or your childcare provider is no longer approved, this could also affect your tax credits.

If you leave the country permanently, then your tax credits will stop. If you go abroad for more than eight weeks, you can only claim tax credits if you get UK benefits or a state pension and you live with your child in another country, or you still pay national insurance in the UK but your family lives abroad.

It’s also really important that you inform the Tax Credit Office if there are any changes to your work life, for example if your working hours fall or rise.

It’s really important to report these changes

You need to report any of the changes above within 30 days of them happening, and the sooner you report them the better. You will need to pay it back if you’re overpaid in tax credits.

If you don’t report a change within the 30 days, you could be fined up to £300 and if you give incorrect information, you could be fined up to £3,000, whether it was on purpose or not.

Other changes you can report

You can also report it if you:

• have a baby, or adopt,

• change bank details,

• move house,

• change your childcare provider,

• stop receiving help with the cost of childcare,

• your benefits change, or

• if a relative becomes or stops being disabled.

It’s sensible to report things like this as soon as possible, so there’s minimum disruption to your tax credits, but there’s no strict deadline to report these changes.

Do tax credits change?

Your tax credits payments can change if your circumstances do. You might find that your payments go up if:

• your income drops by more than £2,500,
• you stop getting benefits or they go down,
• you have a child, or
• your childcare costs rise.

Your payments can go down if:

• your income rises by more than £2,500,
• you don’t renew your claim,
• you’ve been overpaid in tax credits,
• your child has turned 16, 18 or 19 and you haven’t reported that they’re still in approved education or training, and
• you or your partner start claiming Universal Credit.


 Hopefully, that’s given you the information you need if you were unsure about how to manage your tax credits. If you’re not coping with your debt repayments, there’s lots of help available for that too. The options at the bottom of the page will put you in touch with our advisors, and we have lots of information and tips on how to successfully manage your money in the rest of the blog section.

by Christine Walsh

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