TCTM05200 - Changes in circumstances
Changes in circumstances that should be notified (non-mandatory)
The Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002, Reg 16
Some changes may result in an increase in tax credits, while others may result in a decrease and result in an overpayment.
Except for certain circumstances (TCTM05300) any increase can only be backdated for up to 3 months. Any reduction in tax credits will usually be backdated to the date of change. However in certain circumstances the claimant may continue to be entitled to a ‘run on period’ of tax credits for example if the claimant’s job ends or they cease to undertake work for at least 16 hours per week or if childcare costs have reduced by more than £10.00 per week.
Claimants should notify the changes as soon as possible. For types of changes that must be notified see TCTM05100.
The following are the types of changes that should be notified
Changes in the number of children the claimant is responsible for
For example
- When a baby is born or placed with a family for adoption
- A child or qualifying young person joins a family
A qualifying young person starts or stops full time education or approved training
The Child Tax Credit Regulations 2002, Reg 5
HM Revenue & Customs should be notified if:
- A young person returns to full time non advanced education or approved training before they reach 20 provided they were enrolled or accepted on that course before they reach the age of 19.
Changes in Childcare
Tax Credits (Claims and Notifications) Regulations 2002, Reg 21 and Working Tax Credit (Entitlement and Maximum) Regulations 2002, Reg 16
A change of circumstances occurs if:
- A claimant starts paying for approved childcare and is now able to claim help with the cost of childcare through WTC
- A claimant already gets help with the costs of child care through WTC and the average weekly child care costs go up by £10 a week or more, for 4 weeks in a row. For details on how to calculate the relevant change including variable costs see TCTM02660.
Changes in Employment
A change of circumstances occurs if:
A claimant changes their employer. If the claimant qualifies for WTC their entitlement will continue unless the gap between the employments exceeds 7 days
Changes in income
Tax credit awards are based on annual income. Initially, tax credit awards are based on annual income for the previous tax year, i.e. awards for the year 2007/2008 will be based on income for the tax year 2006/2007. But note, initially, awards for the tax year 2003-2004 were based on the annual income for the year to 5th April 2002, nevertheless the same rule applies.
The amount of tax credit can change if a claimant's income (for couples this is joint income) in the year to 5th April 2008 is different from the claimant's income in the previous year.
Claimants should notify the following changes of income:
If income for the year to 5th April 2008 is expected to be less than the income to 5th April 2007. The claimant may be entitled to extra tax credit
If income for the year to 5th April 2008 is expected to be more than £25,000 higher than income for the year to 5th April 2007. The claimant may get less tax credit.
There is no need for a claimant to notify a change if they expect their income for the year to 5th April 2008 to be no more than £25,000 higher than their income for the year to 5th April 2007. It will make no difference to the amount of tax credit they will receive for the current year although the increased income will be taken into account in the following year.
Before 6t h April 2006, there was no need for a claimant to notify a change if they expected their income to be no more than £2,500 higher than theirs previous year’s income.
Other changes of circumstances
HM Revenue & Customs should also be notified if the claimant, partner or child or young person they are responsible for becomes or stops being disabled or severely disabled.
This is because they may become entitled to, or stop being entitled to the disabled or severely disabled elements of the tax credits.
