Tax credits: claimants reminded to renew by 31 July

Claimants who do not yet know their actual income for 2020/21 must still submit an estimate of their income by 31 July – and they need to contact HMRC again by 31 January 2022 to either confirm the estimate is correct or replace it with the actual figures.

Even if someone did not receive any payments during 2020/21, or they have since stopped their claim, if they claimed tax credits at all during the 2020/21 tax year, they will receive papers from HMRC. They must follow HMRC’s instructions to finalise their claim for 2020/21 and, if necessary, make a claim for the current tax year.

For people who had their tax credits claim stopped and who went on to claim universal credit during 2020/21, HMRC should have already finalised the 2020/21 claim and so no renewal pack should be issued. People who claim universal credit² during this renewals period may find they have two packs to complete: one to finalise the claim for 2020/21 and the other to finalise the claim for the current year 2021/22.

Victoria Todd, Head of LITRG, said:

“Anyone who has not received their tax credits renewal pack by now should contact HMRC to chase it up.

“Missing the deadline means you could find yourself having to repay to HMRC all of the tax credits you have received since the start of this tax year in April.”³

Some claimants will receive two forms (one with a red line across it) with accompanying guidance notes. These are known as ‘reply-required’ renewals and the claimant must respond to HMRC by 31 July.

Other claimants will receive just one form (with a black line across it) and these people (known as ‘auto-renewals’) will have their claim for 2020/21 finalised and renewed automatically for 2021/22 using the details HMRC already hold. These claimants need only contact HMRC by the 31 July deadline if something on the form is wrong or they have had a change of circumstances.

Victoria Todd said:

“It is important to read the guidance notes carefully, particularly the parts that explain what counts as income for tax credits. For example, some coronavirus support payments need to be included as income for tax credit purposes, others do not.⁴

“Furthermore, some of the renewal documents will show income figures that HMRC have obtained from employers through the tax system but these may not include the deductions that are allowable for tax credit purposes. For example, during 2020/21, many more people were working from home and able to take advantage of tax relief for home working expenses. This expense is deductible from employment income for tax credit purposes but it will not usually show in the figures HMRC replay in the renewal paperwork.

“People should read the notes carefully to see if any of these deductions apply to them. If using the online system to renew, claimants should ensure they enter their income figure after any allowable deductions and follow carefully the notes that come with the paper pack.⁵ Claimants who have already renewed have until 31 July to give HMRC an updated income figure for 2020/21 if they have missed off any deductions or have made any mistake, such as forgetting to include certain coronavirus support payments.”

People can renew tax credits online, via the HMRC App, by telephone or through the post. HMRC’s on-line service is found on the official Gov.UK website, either via their personal account (if they have set one up) or by going directly to the ‘Manage your tax credits’ service.⁶

Victoria Todd added:

“Unfortunately, this time of the year sometimes sees an increase in fraudulent activity which often targets the most vulnerable taxpayers. Claimants should remember that tax credits can only be renewed using the official HMRC phone number, Gov.UK website, the HMRC app or by post to HMRC.’’