Tax credits time

28 June 2011 Last updated at 23:05 GMT Money Talk by Chas Roy-Chowdhury Head of taxation, ACCA Failure to notify HMRC of changes in circumstances might result in underpayments or overpayments Normally, renewing your tax credits is a simple case of updating HMRC about changes in your circumstances.

But because of the changes announced by the government since the last election, the benefits you are entitled to may have changed.

You need to send in the renewal form by 31 July. If you have not received yours by 15 July, call the tax credit helpline on 0845 300 3900.

The HM Revenue and Customs (HMRC) is also a useful source of up-to-date information and frequently asked questions.

What you need to know Firstly, the rate at which payments decrease above a certain income threshold has been speeded up, especially for higher earners.

The reduction is now 41p - up from 39p - for every pound above the threshold.

At the same time, some thresholds have been lowered. The household income threshold has dropped from ?50,000 to ?40,000.

Secondly, some benefits have been increased.

The child element of tax credits is going up this year above inflation, which will help make up for the freeze in child benefit that will affect those on low incomes.

What you need to tell HMRC

HMRC will have sent you an annual review notice in your renewal pack TC603R.

This means your claim will be renewed automatically.

But failure to notify HMRC of any changes in your circumstances might result in underpayments or overpayments.

The changes you need to report include:

if your child or children are no longer living at home with youyou separate from your partnerone of your children leaves full-time education

A full list of changes that require HMRC to be notified is contained in the renewal pack.

Forms

If your circumstances have changed, you are filling in your first claim or renewing over the phone, you will need to have some forms handy.

If you are in employment, you will need your P60 form with you.

If you are self-employed, you will need a copy of your accounts.

And if you are using estimates, you will need to provide HMRC with actual income, usually within 30 days.

Future changes

A couple of extra changes later this year could affect future claims.

The 50+ Return to Work element will stop from the 6 April 2012.

Also from 6 April 2012, couples with children must work at least 24 hours a week between them, with at least one partner working for 16 hours, if they want to continue to make a claim.

The exception is if one partner is incapacitated or in hospital or prison, in which case only a total of 16 hours work a week is required.

If you increase your hours to continue claiming, you will need to tell HMRC as soon as possible.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

View the original article here