Renewal of Tax Credits

If you currently receive either the child tax credit or the working tax credit then you may shortly receive the renewal application forms to enable the claim for the year ended 5th April 2007 to be finalised and for you to make a claim for the year to 5th April 2008.

The tax credit you received for the year to 5th April 2007 was based on your income for the year to 5th April 2006.  This will need to be re-calculated based on your actual income for the year to 5th April 2007.   If your actual income for the year ended 5th April 2007 is more than £20,000 higher than the original estimate then there could be a claw back of tax credits awarded for the year to 5th April 2007.  In addition there could be a reduction in the entitlement for the year to 5th April 2008 which will become based on the previous year.  It is unclear as to how this claw back will be collected but the effects could be quite considerable, particularly if this is combined with increased tax liabilities which will result from higher levels of income.

The forms for the renewal of tax credits need to be submitted before 30th September 2007.  If you do not have details of your actual income for the year to 5th April 2007 by the end of September then an estimate can be provided.  Failure to return the appropriate renewal form to the Inland Revenue by 30th September 2007 could result in the tax credits being stopped.  There are potential penalties for failing to complete the appropriate forms in certain circumstances.  In any event the absolute deadline for providing the actual figures is 31st January 2008, which is the same deadline as that for filing your tax return.

If you would like us to assist you with the completion of the tax credit renewal forms then please provide us with all the necessary details, books and records, etc, by the end of June 2007.  This will enable us to meet the 30th September deadline on your behalf.  Please let us know if you do not receive anything from the Inland Revenue regarding your renewal by the end of June, even if your previous claim did not entitle you to any tax credits.

If you only receive the basic family element of the child tax credit (£545 per annum or approximately £45 per month) then it is possible you will not need to fill in a renewal form unless your circumstances have changed.

The time limits mentioned above apply to people already within the tax credit system.  They do not affect the rule that new claims can only be backdated by three months and that any major changes in circumstances which could affect the amount of tax credits should also be notified to the Tax Credit Office within three months of the change.

This statement is based on our understanding of the rules as they currently stand.  The Government may change the rules in the future but the timetable detailed above will probably apply each year in the future as well as for the current year.

If you have any further queries please do not hesitate to contact the person who usually deal with your affairs.