⚠️ Universal Credit (UC) is gradually replacing tax credits, and some other social security benefits. Universal credit is now available across the UK and HMRC state that it is no longer possible for anyone to make a brand-new claim for tax credits. Instead, people are expected to claim UC or pension credit if appropriate. Existing tax credit claimants can continue to renew their tax credits and/or add extra elements to their claim. See our tax credit page for more information. Our understanding is that the majority of existing tax credit claimants will move to either universal credit or pension credit. It is expected that the majority of people who have not reached state pension age, and who continue to claim tax credits, will be invited to move to UC by the end of 2024. You can find out more about this in our universal credit section.
What changes do I need to report?
Tax credits and benefits
Your tax credit award is based on your circumstances at the time you claim, or renew your claim. If your circumstances change, it may affect the amount you are entitled to.
When should I report changes?
Some changes must be reported to HMRC and within a certain timeframe, these are changes that are likely to reduce your award. If you don’t do this within one month of the change (or when you became aware of the change) you may be charged a £300 penalty. If you fail to report a change during the tax year and then confirm the incorrect information as part of your renewal the penalty could be up to £3,000. Overpayments will start to build up from the date of the change if there is a decrease in your award as a result.
You should report changes that increase your entitlement as soon as possible and no later than 1 month from the change, otherwise you may miss out on money.
What changes do I have to report?
Some changes must be reported to HMRC.
You can find HMRC's full list of changes on the GOV.UK website.
What other changes should I report?
- you have a new baby, or a new child joins your household**
- you, or someone you are claiming for, starts or stops getting a disability benefit (for example, disability living allowance (DLA) or personal independence payment (PIP))
- you, or someone you are claiming for, starts or stops getting the highest rate of DLA Care or the enhanced rate daily living component of PIP or armed forces independence payment (AFIP) or the higher rate daily living components of Scottish disability assistance or the higher rate of attendance allowance
- you start paying childcare costs and you want to claim the childcare element
- your childcare costs go up by more than £10 a week for four weeks in a row
- your normal working hours increase to 30 a week.
You are likely to have an overpayment if the change means you are entitled to less tax credits than you have been getting. Any change that reduces the amount of tax credits you get will usually take effect from the date the change happened.
You are likely to be underpaid if the change means that you are entitled to more tax credits than you have been getting; the extra money can only be paid from up to one month before the date the change is reported.
**From 6 April 2017 onwards, a child element of child tax credit will not be included with the award for 3rd and subsequent children born after 5 April 2017, although there are exceptions to this rule. It's important that you still tell HMRC when you have another child or when a child leaves your household, even if you don’t get a child element for them so that HMRC can keep their information up to date and make sure your payments are correct if there are any other changes that may happen.
The disabled child element of CTC and the childcare element of WTC are not affected by this rule and are included for any number of children in the claim where the qualifying conditions are met.
Will I need to claim universal credit if I report a change?
If you report a change that ends your tax credits award, for example you have moved in with a new partner or you have permanently separated from your existing partner, then this might mean you will have to claim universal credit (or pension credit, depending on your age) if you still need support. This is because 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.
What about changes in my income?
You do not actually have to tell HMRC about changes to your income until after the end of the tax year when your claim is being renewed and any changes in income will be taken into account at that stage. However, if you tell HMRC about any income changes as they happen, it means any changes to your award can be kept up to date and you reduce the risk of being overpaid or underpaid during the tax year. The income disregard was reduced to £2,500 from 6 April 2016 which means that any rises in income of more than £2,500 from one year to the next will likely lead to an overpayment if you wait until the end of the year to tell HMRC.
HMRC often use information about earnings provided to them by employers (Real time Information – RTI) so if the information suggests your earnings are changing by more than £2,500 during the year, HMRC may amend your award to try and prevent an under or over-payment by the end of the tax year. If they do this, they will contact you.
What about other changes?
You should tell HMRC about any changes to your address or bank account information as soon as you can to make sure their records are up to date and you avoid any delays in payments or letters getting to you.
How do I notify a change of circumstances?
You have to tell HMRC’s tax credit office about any changes that may affect your tax credits. Even though other parts of HMRC (or DWP) may already have the information you cannot rely on HMRC updating information from, say, your income tax records through to your tax credit records. Sometimes, HMRC will use information they already have about you to amend your award because it is helpful to you, but the way the rules are written means that you are still responsible for specifically giving the information to HMRC for your tax credits. This includes if you stop working and start claiming UC, you should still tell HMRC you have stopped working.
You can either tell HMRC using either their on-line service or the HMRC app or ring HMRC’s tax credit helpline or write to HMRC’s tax credits office.
If you ring HMRC’s tax credits helpline, make sure you make a note of the date and time of your call and the name of the person you spoke to. It is also a good idea to confirm the change in writing, keeping a copy of the letter as proof that you have advised HMRC of the change. Letters can be sent recorded delivery, but at the very least get proof of posting.
You can notify most changes online using HMRC’s tax credits Manage your tax credits service, via the GOV.UK website. You can also reach the ‘Manage your tax credits service if you go through your Personal Tax Account and follow the tax credit links. For security purposes, you will need to set-up a Government Gateway account (or you can use your existing Government Gateway account if you already have one) and you will be sent a unique digital code, via your mobile phone or landline, each time you log in to the tax credits digital service. If you notify a change online, it’s a good idea to make a note of the change and retain your confirmation of when you sent it.
If you have a smart phone (iPhone or android) you can also use the HMRC app to notify many kinds of changes, check your payments and complete your renewal during the renewal period. The HMRC app is free to download.
If the change affects the amount of your tax credit award, HMRC should send you a new decision letter (called an award notice), giving details of any changes to your payments and how these have been worked out. This normally takes up to three weeks but if you have not had a letter from them after that time, you can telephone HMRC to chase it up. You should always check the award notice carefully, to make sure that the change you reported has been correctly recorded. If it has not you must tell HMRC within 30 days that their award notice is wrong, otherwise you may become responsible for any overpayments that may arise as a result of the mistake.
This page gives a brief overview about changes of circumstances for tax credit awards. There is more detailed information on the following pages:
- What counts as income for tax credits?
- What can I do if I have an underpayment?
- What can I do if I have an overpayment?
- Tax credits: changes of circumstances on our website for advisers.
- Further information on changes that affect your tax credits, and how and when to report changes can be found on the GOV.UK website.