Act quickly to get your tax credits reinstated

Meeting the 31 July deadline was crucial for those who were told to contact HMRC to renew their tax credits. HMRC stop tax credit payments to people who were required to reply and who missed the deadline. These people will receive a Statement of Account letter from HMRC. This letter will explain that HMRC have stopped their payments and will ask them to pay back all the tax credits paid since the start of the 2021/22 tax year (that is, from 6 April 2021).¹ If this happens, all is not lost, but you need to act quickly, advises LITRG.

Head of LITRG Victoria Todd said:

“We urge people to contact HMRC as soon as possible if they have missed the 31 July deadline.

“If HMRC have stopped their payments, provided they contact HMRC within 30 days of the date on their Statement of Account letter and complete their renewal, HMRC will process the renewal and reinstate their 2021/22 claim back to 6 April 2021.

“People who are self-employed and do not yet have final details for the 2020/21 tax year must still give an estimate and then either confirm the estimate, or file actual figures, by 31 January 2022.”

If someone misses this 30-day deadline, they can only renew and secure their claim for 2021/22 if they complete their renewal by 31 January 2022 and can satisfy HMRC that they had ‘good cause’ for missing both the 31 July deadline and the extra 30-day deadline.

Victoria Todd said:

“If someone misses the extra 30-day deadline and does not satisfy HMRC that they have ‘good cause’ for being late, HMRC will ask them to repay all tax credit payments made to them from the start of the tax year and they will not renew the tax credit claim.

"Now that universal credit has been introduced across the UK, HMRC state that most people can no longer make  new tax credit claims². Therefore, it is even more important that people act quickly to renew their claim if they have missed the 31 July deadline and received a Statement of Account letter from HMRC.

"The interactions between universal credit and tax credits are complicated. If a claimant misses the additional deadlines, we advise that they get some welfare rights advice³ as soon as possible and before they submit a claim for universal credit to understand fully their position and options for next steps.”⁴

Notes for editors

1. Claimants had until 31 July 2021 to renew their tax credits awards. This means that claimants who received a reply-required renewal pack – with a red line across it – were told to contact HMRC to renew by 31 July 2021 otherwise their claim would not be renewed and their payments would stop. Each year, tax credits claimants receive a renewal pack from HMRC. The renewals process does two things: firstly, it finalises the claim for the tax year that has just ended (2020/21) and secondly it acts as a claim for the new tax year (2021/22). If the tax credit claim ended during 2020/21 and the individual claimed universal credit in the same tax year, they will not receive a standard renewal pack as their claim for 2020/21 should already have been finalised under the in-year finalisation process.

2. Information about who can make a claim for tax credits is available on the Revenuebenefits website for advisers.

3. Claimants can visit www.advicelocal.uk for information on organisations who can provide free, independent advice and support.

4. If someone has made a universal credit claim and has their tax credits award reinstated because they have renewed within 30 days of the Statement of Account or by 31 January 2022 and HMRC accept they have good cause for missing the earlier deadlines – HMRC will reinstate their tax credits from 6 April 2021 but it will only be awarded until the day before the universal credit claim started.

5. Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.  

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact Hamant Verma, External Relations Officer, 0207 340 2702 [email protected]