Tax credits renewals and next steps as tax credits come to an end

Tax credit renewals – what it is and what you need to do

Tax credit awards run for a maximum of one tax year and then the claim needs to be renewed for the following tax year. The renewals process allows HMRC to finalise the award for the tax year just ended (2023/2024) and, where appropriate, set up the renewal award for the next tax year (2024/25). In some cases, HMRC will only finalise the award for the year just ended and will not treat your renewal as a claim for the 2024/25 tax year.

The renewals process takes place each year and is separate to the tax credits in-year finalisation process. In-year finalisation is used to finalise an award when:

• a tax credit claimant claims universal credit in the same tax year as their tax credits stop; or
• a tax credit claimant has received a migration notice but chosen not to make a claim for universal credit by the deadline given (where that deadline was on or after 6 April 2024); or
• a tax credit claimant receives a tax credits closure notice.

You may receive a renewal pack and an in-year finalisation pack around the same time. The renewal pack is to finalise your 2023/24 claim and set up a claim for the new tax year and the in-year finalisation pack is to finalise your claim from 6 April to the date your tax credits terminated.

Each year, HMRC send out tax credit renewal packs. There are two types of renewal and what you need to do depends on which type you get. This year, HMRC have said the majority of renewal packs will be auto-renewals, but they will still be sending some reply-required renewal packs.

   Tip: If you have not received your renewal pack by 20 June 2024, you should contact HMRC.

   Even if your tax credits ended in the 2023/24 tax year, you will still receive a ‘renewal’ pack. This is because although you won’t be making a new claim in 2024/25, HMRC still need to finalise your claim for 2023/24.

Auto-renewal

The pack will have a black line across the first page and say ‘check now’.

Auto-renewals are where HMRC show all your circumstances and income and ask you to check the details.

You only need to contact HMRC if there is anything wrong or missing. If everything is complete and correct, you don’t need to do anything. HMRC will finalise your award for 2023/24 and set up your award for 2024/25 if appropriate. In some cases, if your tax credits terminated in 2023/24, HMRC will just use the process to finalise the 2023/24 claim and no new claim will be set up for 2024/25.

The renewal notice is also your final award notice for 2023/24 and, if relevant, shows your new award and payments for 2024/25. Information about your new award and payments is created automatically from HMRC’s computer system. However, because tax credits are ending, the amount of your award for 2024/25 that is shown in the renewal pack paperwork and the payments for 2024/25 may both change if your award ends part way through the 2024/25 tax year.

Reply-required renewal

The pack will have a red line across the first page and say ‘reply now’.

Reply-required renewals are where HMRC ask you to check the details they hold about you and also ask you to tell them your annual income for 2023/24.

You must reply to complete your renewal. The deadline for replying is 31 July 2024. If you do not yet know your actual income for 2023/24 you should give HMRC an estimate of your income by 31 July 2024 and then give them your actual income figure by 31 January 2025.

Missing the deadline

If you have a reply-required renewal pack and you don’t complete your renewal by the deadline of 31 July 2024, your tax credits will end and any tax credit payments you have received from 6 April 2024 will be overpaid and need to be paid back.

If HMRC terminate your tax credits because you have failed to renew on time, they will send you a statement of account letter. If you contact them to complete your renewal within 30 days of the date on that letter, your tax credit award can be reinstated from 6 April 2024. However, if you have claimed universal credit since 6 April 2024, your renewal tax credit award, once reinstated, will end the day before your universal credit claim was made.

If you miss the deadline for renewing your tax credits and you miss the 30 days ‘grace’ period, HMRC will be able to reinstate your award only if you can show them you had good reason for missing both deadlines and you contact them to complete your renewal them by 31 January 2025. Again, if you have claimed universal credit in the meantime, your renewal tax credit award will end the day before your universal credit claim was made.

Checking your renewal papers

The renewal pack should include some guidance notes. You should read those notes carefully, especially the parts that explain what counts as income for tax credits.

Your renewal papers might show income figures that HMRC have received from employers and pension providers through the tax system. However, these figures don’t always include the deductions that are allowable for tax credit purposes. Make sure you check to see if you can make any deductions from your income for things such as certain pension contributions, employment expenses and gift aid donations.

There is more information about tax credit renewals on GOV.UK.

How to renew tax credits

There are several ways you can renew tax credits including using the HMRC app (which is free to download), online, by telephone or by post.

HMRC’s tax credit online service is available only via GOV.UK using either your personal tax account or the online tax credits service ‘Manage your tax credits’.

Tax credit renewals and universal credit

Universal credit is gradually replacing tax credits. Most tax credit claimants will be expected to get support through universal credit instead of tax credits and some will be expected to claim pension credit instead. For a small number of existing tax credits claimants, who are unable to move to universal credit or pension credit, tax credits support will end and HMRC say there will be no ongoing tax credit awards after 5 April 2025.

  HMRC are including some information about these changes with the renewal packs this year, but further information and instructions will be sent to claimants to tell you what you need to do. You do not need to take any action until you receive a formal migration notice or a tax credits closure notice. 

The universal credit formal migration notice is completely separate to tax credit renewals and you must follow all the instructions, even if you receive your migration notice at a similar time to your tax credit renewal pack.

If you are sent a migration notice as part of the managed migration exercise, your universal credit migration notice will invite you to claim universal credit by a certain date (there is usually a 3 month deadline). Your tax credits award will end when you claim universal credit or if you don’t claim, the day after that deadline date. Whether or not you claim universal credit, HMRC will use the in-year finalisation process to finalise your tax credits award that you have received from 6 April up to that date. This is different to how tax credits are usually finalised because it broadly only looks at your income for the period between 6 April and the date your tax credits ended. Some people may be migrated to pension credit and they will receive a tax credit closure notice inviting them to claim pension credit, or if they are already claiming pension credit, telling them when their tax credits will end.

If you claim universal credit early in the tax year, it is possible you will receive a normal renewal pack and an in-year finalisation pack. The renewal pack will be finalising your claim for the 2023/24 tax year and the in-year finalisation pack is finalising the claim from 6 April to the date your tax credits end.

There is more detailed information about existing tax credit claimants and universal credit in our moving to universal credit section.