The end of the tax credits system

Working tax credit and child tax credit, often referred to as tax credits, were introduced in 2003. After 22 years, the tax credit system is closing and there will be no tax credit awards after 5 April 2025. This is because tax credits have been replaced by universal credit for most people under state pension age. Most tax credit claimants have already been invited to claim either universal credit or pension credit, but a small number of people will not be entitled to either benefit which means their tax credits will end on 5 April 2025.

Existing tax credit claimants

HMRC are making some changes to its tax credit computer system in the lead up to 5 April. As a result, if you are still receiving tax credits you should have received an updated award notice in February showing any changes to your remaining payments.

If you are an existing tax credit claimant you will either:

• receive a notice from the Department for Work and Pensions or Department for Communities (in Northern Ireland) asking you to claim universal credit or pension credit by a certain date. This will either be a migration notice or a tax credit closure notice; or
• not receive a notice and, subject to any changes in your circumstances, will stay on tax credits until 5 April 2025 when your payments will stop.

Tax credits migration notice and tax credits closure notice

If you are currently receiving tax credits and you have been sent a migration notice inviting you to claim universal credit or a tax credits closure notice inviting you to claim pension credit, you should follow the instructions in the notice if you want to continue getting financial support. You may also be sent a tax credit closure notice if you are already claiming pension credit. Your tax credit payments will end on the deadline date stated in your notice. If your notice was sent to you between 27 January and 5 April, your deadline date is likely to be 5 April 2025 and so you will have a short period in which to make your new claim (if appropriate).

  If you are not sent a migration notice or tax credits closure notice before 6 April 2025, or you receive one but don’t make your new claim by the final deadline (the deadline date on your notice plus one month), you will not be able to have transitional protection if you later claim universal credit or pension credit. If you miss the deadline in your notice but make a claim for universal credit or pension credit within one month of that deadline date, called a grace period, your claim for the new benefit will be backdated to the deadline date and transitional protection will be applied. 

Tax credit claimants who won’t be sent a migration or tax credit closure notice

Not all existing tax credit claimants will be sent a migration notice or a tax credit closure notice, either because they are not going to be entitled to support through universal credit or pension credit, or because they are not currently getting a tax credits award. For example, you won’t be sent a notice if:

• you have an existing tax credit claim but your payments are nil due to your household income. HMRC say you will not be sent a tax credits migration or tax credits closure notice because you do not have an award. See below if you have a live appeal and a nil award.
• you live outside the UK and are currently getting child tax credit under certain EU withdrawal agreement rules. Your tax credits will end on 5 April 2025. Universal credit and pension credit are not payable to individuals residing outside the UK.

  If you think your nil award for 2024/2025 is wrong because your income is lower than HMRC have on record, you should contact HMRC as soon as possible before 5 April 2025 to update your income information. HMRC will then update your award and, if this means you do qualify for some payments, you can then be issued with a migration or tax credit closure notice, if appropriate. If you do not update your income information until after 5 April 2025, HMRC say you will not be sent a migration or tax credits closure notice even if your decision is then changed and you are awarded some payment. If you do not have a migration or tax credits closure notice, you cannot get access to transitional protection. In addition, if you contact HMRC very close to 5 April deadline we understand it is possible that there will not be time for a migration or tax credits closure notice to be issued before tax credits end. Our understanding is that if no migration or tax credits closure notice is issued before tax credits end, you will no longer be able to access transitional protection.  

Tax credit ‘renewals’ in 2025

As tax credits are ending on 5 April 2025, the usual ‘renewals’ exercise will be very different this year. If you have been sent a migration notice or tax credit closure notice, your award for 2024/2025 will have been finalised at the point it ended under in-year finalisation rules.

If your award ended for any other reason during 2024/2025, or if you are still claiming tax credits by 5 April and have not been asked to claim universal credit or pension credit, then you will need to finalise your claim after 5 April. You won’t be sent a normal tax credits ‘renewal’ pack, but you will still be sent a tax credits ‘finalisation’ pack, shortly after 5 April 2025. The pack will include instructions on what you need to check and whether you need to make a declaration to HMRC by the date quoted in your finalisation pack. Most people will only need to make contact if something is wrong, missing or incomplete. HMRC say you will have 30 days from the date of your letter to reply if HMRC require a response. If you don’t know your actual annual income figure for 2024/2025 and need to give HMRC an estimate, you can still do so by your declaration deadline date but HMRC say you will need to tell them your actual income figure by 31 October 2025.

  Please note that the traditional declaration dates of 31 July and 31 January will not be used for the 2025 end of year finalisation exercise.

Other issues after 5 April 2025

There are still some tax credit issues that you may need to deal with after the system closes down on 5 April 2025. Here we provide a summary of the things you might need to know about after 5 April 2025:

Tax credit disability elements for earlier periods

If you, your partner or children are awarded certain disability elements after 5 April that are backdated to cover a period you were on tax credits, you may be entitled to the tax credit disability elements for a past period. You must notify HMRC within one month of the date your disability benefit decision is made and, if you do, they will re-calculate your previous tax credit awards and pay you any money owed where it leads to a higher award. HMRC say they will usually look to offset any underpayments against any tax credit overpayment debts. The newly recalculated award may also be sent to DWP which could lead to a recalculation of any transitional protection in place. 

Outstanding tax credit appeals and mandatory reconsiderations

If you have no tax credits award in payment by 5 April 2025, but have an appeal that has not yet been decided, you will not be sent a migration notice or tax credits closure notice. If the appeal or mandatory reconsideration is later resolved in your favour, then HMRC will send you any tax credit payments you are entitled to up to and including 5 April 2025. HMRC say you will not be sent a migration or tax credits closure notice.

If you have received a migration notice or tax credits closure notice, and have an active tax credits appeal that has not yet been decided, the appeal will continue through the normal appeals process. Once the outcome is decided, if it affects your tax credit entitlement for periods to 5 April 2025, those awards will be revised and any payments due made directly to you. Any transitional protection given to you upon moving to universal credit or pension credit may be recalculated as a result. 

Home Office asylum backlog cases

If you have claimed asylum and the Home Office makes a decision after 5 April 2025 to grant you refugee status, you may be entitled to child tax credits backdated to the date of your asylum claim. You should tell HMRC within a month of getting your Home Office confirmation and they can deal with your claim and send you any backdated child tax credits payments you are entitled to up to and including 5 April 2025. HMRC say you will not be sent a migration or tax credits closure notice which means you will not be entitled to any transitional protection if you claim universal credit or pension credit.

Tax credits digital service

HMRC’s digital service, ‘Manage your tax credits’, will end after 5 April 2025. In addition, information about your tax credit award will no longer be available via your personal tax account or the HMRC app. HMRC’s telephone and post services for tax credits will continue and some online forms, such as the appeals form and dispute form, will continue to be available via the GOV.UK website.

Notional entitlement

If you have a tax credit overpayment that was caused because of a claim made as a single person instead of as a couple (or the other way round), you can ask HMRC to apply what they call notional entitlement. This means they look at what you would have been entitled to if the claim had been correct and offset that from the overpayment. From 6 April 2025 onwards, HMRC are introducing a 3 month deadline (usually from the date of decision) to request notional entitlement, which is the same as their deadline for disputing an overpayment.

Tax credit overpayment debts

If you move across to universal credit, any overpayment debts will be recovered from your universal credit award. Similarly, if you move to pension credit, overpayments of tax credits may be recovered from pension credit awards. Some overpayment debts may be passed to DWP to recover through your employer (even if you are not claiming any DWP benefits). Otherwise, HMRC will continue to recover the debt and you will need to speak to them about arranging a time to pay arrangement if you cannot pay in one go. See our tax credit overpayment page for more information. If your debt has been transferred to DWP, HMRC are unable to confirm any outstanding balance, so you will need to contact DWP debt management for this information.