Personal Tax

Changes in circumstances for tax credits

Produced by Tolley
  • 19 Oct 2021 22:32

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Changes in circumstances for tax credits
  • Migration of tax credits to Universal Credit
  • The circumstances of the household
  • What is a change in circumstance?
  • Deadline for notifying a change in circumstance
  • Reporting changes in circumstances

Changes in circumstances for tax credits

Migration of tax credits to Universal Credit

New claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants will continue to receive tax credits until they are migrated to the universal credit system. Migration will take place when a change in circumstances is reported.

See the Universal credit guidance note.

The circumstances of the household

The payment of tax credits is based not just on the income of the household but also the circumstances of those people included in a tax credit award notice. This includes the children or qualifying young persons as well as the claimants.

Therefore, when advising a client regarding tax credits, it is important that you have a thorough understanding of the circumstances which might affect a claim. For example, this could be whether there are any disabilities in the household, or childcare payments.

When changes occur, it is important that HMRC is notified within the required deadlines. The claimant will then be migrated to the universal credit system unless they are entitled to severe disability premium.

What is a change in circumstance?

The main types of change that could affect a tax credit award are:

  1. changes in the number of adults in the household (for example if a couple breaks up or two people begin living together as a couple, or a claimant leaves the UK or dies)

  2. changes in eligibility to the elements of tax credits (for example, the arrival of a new child or qualifying childcare)

  3. changes in the number of hours a claimant works (for example, when he stops working at least 16 or 24 hours a week (as appropriate) or where he stops working 30 hours a week)

  4. changes in income between current and previous year

TCA 2002, s 6; SI 2002/2014, regs 19–29; TCTM05100, TCTM05200

Deadline for notifying a change in circumstance

There are certain changes in circumstances that have to be notified within one month of the

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