People are being warned they might have to give back hundreds of pounds if they miss an important deadline later this month. HM Revenue and Customs (HMRC) has issued a warning to around 323,700 people yet to renew their claim for tax credits that they must do so before the upcoming deadline on July 31.
Working tax credit and child tax credit help working families with targeted financial support - but people could see their credit stopped and have to repay what they've earned if they miss the upcoming deadline, according to the Daily Record. Around 1.9 million families are estimated to be getting either child tax credit or working tax credit as of April, 2021.
For people struggling to cope with soaring costs of living, any help they get makes a huge difference. The advice is that it's therefore crucial they don't miss any deadlines which might result in losing money they've been given.
Read more: National Insurance: How much tax you will pay after changes come into force from July
Here is everything you need to know about working tax credit, including what it is, the upcoming deadline and how to renew your claim.
What is working tax credit and child tax credit?
Working tax credit is money provided to boost the income of working people who are on a low income. It doesn't matter whether you are working for someone else or are self-employed. Working tax credit counts as income when working out your entitlement to most other means-tested benefits, such as housing benefit.
Child tax credit is paid to people who have children. It is paid in addition to child benefit and you do not have to be working to get it. You are able to get both payments under certain circumstances. The amount of tax credits you get depends on a number of factors including the total amount of taxable income you and your partner have, whether you, your partner, or your children have a disability or long-term health problem, the number of hours you work and the amount you pay for childcare.
What are the current working tax credit rates?
Here are the current working tax credit rates for the 2022/2023 financial year:
Basic element: £2,070
Couple and lone parent element: £2,125
30 hour element: £860
Disabled worker element: £3,345
Severe disability element: £1,445
Here are the current childcare element of working tax credit rates for 2022/2023:
Maximum eligible cost for one child: £175
Maximum eligible cost for two or more children: £300
Percentage of eligible costs covered: 70%
The current child tax credit rates for 2022/2023:
Child tax credit family element: £545
Child element: £2,935
Disability element - disabled child rate: £3,545
Disability element - severely disabled child rate: £1,430
The tax credits income thresholds and withdrawal rates for 2022/2023:
Income threshold: £6,770
Withdrawal threshold rate (%): 41%
Threshold for those entitled to child tax credit only: £17,005
Income rise disregard: £2,500
Income fall disregard: £2,500
How do I renew my claim?
Claimants can renew their tax credits for free on the GOV.UK website or the official HMRC app. Customers can also log into their online account to check on the progress of their renewal, be reassured it’s being processed and know when they will hear back from HMRC.
What happens if I forget to renew my claim before the deadline?
If you don't renew before the deadline, you’ll be sent a TC607 statement. According to the UK government, if you contact HMRC within 30 days of the date on the statement your tax credit claim may be restored and you will not have to pay anything back.
If you contact HMRC later than the 30 days, they will ask you to explain the reasons for the delay - known as ‘good cause’ - before they consider restoring your claim. If your claim is restored, HMRC will tell you how much you’ll get within eight weeks of receiving your renewal.
If you do not contact HMRC at all after receiving the statement, your tax credits payments will stop and you will have to pay back the tax credits you’ve received since April 6, 2022. If HMRC stops your payments, you cannot make a new claim for tax credits. This is because tax credits are currently being phased out and will be replaced by universal credit by 2024.
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