HM Revenue & Customs has written to over a million Tax Credits claimants telling them they will be taken out of the Tax Credits system unless they contact the Tax Credit Office by 31 March 2012.
Have you had this letter? It’s very misleading.
Due to the changes in the required working hours and income thresholds many families won’t be eligible for Tax Credits anymore. But due to the complexity of the tax credits system, the level of family income that reduces a tax credit award to nil varies for every family.
If you received the letter from HM Revenue & Customs, remember that it has not been tailored to your circumstances. It does not explain the changes to the Tax credit system and quotes income ceilings for Tax Credit claims that are almost certainly wrong for the majority of claimants. For example, the income limit for child Tax Credit claims is given as £26,000, but where the family has more than one child, or has a disabled child, or pays for childcare, the income limit for positive claims will be much higher, perhaps as much as £50,000.
If you have received one of these Tax Credit letters, you MUST contact HM Revenue & Customs and stay in the tax credits system, at least until your income for 2012/13 is more certain.
The reasons for doing this are:
- A new Tax Credits claim can now only be back-dated for one month (previously three months);
- A nil award provides protection should the family circumstances change in the year, such as a trading loss, new baby, or redundancy. The revised tax credits claim will be based on the income for the full year;
- Any Tax Credits over payments generated in earlier years will become immediately payable on leaving the tax credit system; and,
- Claims for the disability element of working Tax Credits may not be able to be renewed if they lapse.