Tax credits renewals

Overview of the renewals process

Each year, HMRC will automatically send you a set of 'renewal' papers, and so long as you do what you are asked within the time limits requested, the legislation treats you as having claimed again for the new tax year. Although called the ‘renewals process’, not everyone wants to or needs to renew their claim. However, you still need to follow the instructions to complete any forms sent to you as the process is also used to finalise the award for the tax year that has just finished.

The process aims to do two things: to finalise your entitlement for the year just gone (the current year) and compare it with what you have been paid, and to renew your tax credit award for the coming year.

Although the process is often referred to as the ‘renewals process’, not everyone will want or need to renew their claim. Some people, for example where a joint award ended in the tax year just ended, will need to finalise the old award but will not be making a new claim. In this case they are not renewing – merely finalising the old award.

Now that UC is available across the UK, HMRC state it is no longer possible to make a brand new claim for tax credits. The only exception to this is for certain people who are granted refugee status. Tax credit awards only last for a maximum of one tax year and that is why HMRC have a renewals process which enables a claim to be made for the next tax year. Although brand new claims for tax credits can no longer be made, existing tax credit claimants who are renewing their award can continue to do so for the time being.

  If your tax credits claim ends because you have claimed universal credit in the same tax year, HMRC will ask you to finalise your tax credits claim ‘in-year’. HMRC will also ask you to finalise your claim in-year if you are sent a migration notice asking you to make a claim by certain deadline and you do not do so. Your tax credit claim will be terminated if you do not make a claim by the deadline and HMRC will in-year finalise your tax credit claim. The in-year finalisation process is different to the normal renewals and finalisation process outlined below. See our in-year finalisation page for more information.

The renewals process

When you claim tax credits, your award is based on your circumstances for the year you claim and your income for the previous year. This is your initial award. Once the tax year ends, HMRC use the renewals process to finalise your award for the year just ended (by asking for your actual income figures).

After giving your income for the year just ended to HMRC, it is also used, together with your latest set of personal circumstances, to set your new initial award for the new tax year.

So we have a three-year rolling programme. The initial claim for 2023/24 was based on circumstances current in 2023/24 and income for 2022/23. The renewal process carried out in Summer 2024 finalises the award for 2023/24 by comparing the actual income of 2023/24 with that for 2022/23 to finalise the entitlement for 2023/24 and uses the actual income figure for 2023/24 to set the initial award for 2024/25.

The comparison works like this for finalising 2023/24 awards:

• If 2023/24 income is less than 2022/23 income by £2,500 or less, the final award is based on 2022/23 income and there is likely to be no change in the finalised award.
• If 2023/24 income is less than 2022/23 income by more than £2,500, the final award will be based on 2023/24 income plus £2,500. There is likely to be an underpayment.
• If 2023/24 income is greater than 2022/23 income by £2,500 or less, the final award, like the initial award, is based on 2022/23 income and there is likely to be no change in the finalised award. So an increase in income of £2,500 or less is disregarded (hence the £2,500 is commonly known as 'the disregard').
• If 2023/24 income is greater than 2022/23 income by more than £2,500 the final award is based on 2023/24 income less £2,500 and there is likely to be an overpayment.

The initial award for 2024/25 will initially be based on actual income for 2023/24 regardless of the income disregards. So an initial tax credit award is made in the year of payment, then revised after the end of the year to produce in many cases an underpayment or overpayment.

To understand more about how these income disregards work see our income disregards section.

  It is expected that most tax credit claimants will have moved to universal credit, or been invited to move to universal credit, by the end of the 2024/2025 tax year.

It should be noted that in 2006/2007 and earlier years, the disregard for increases in income was only £2,500. It increased to £25,000 from 6 April 2007. The disregard for rises in income decreased to £10,000 from 6 April 2011 and then to £5,000 from 6 April 2013 and back to £2,500 from 6 April 2016.

Renewal packs

HMRC have two different types of renewal pack that they send to claimants. These are:

• A TC603R auto-renewal form – this form will have a black line on the front of it; or
• A TC603RR plus TC603D (reply required) or TC603D2 (if HMRC need information for more than one year) this form will have a red line on the front of it, plus guidance notes (TC603R or TC603RD). It is very important to read these guidance notes, even if you are planning to renew online or via the HMRC app.

If your tax credits have ended because you have claimed universal credit, or you have been invited to claim universal credit by a migration notice and do not do so, then the process is different to that outlined on this page. Please see our page on in-year finalisation for more information.

You should carefully check which form you have received and follow the instructions as the process for renewing is different depending on which form you receive.

If your claim ended (for any reason other than moving to universal credit) during the 2023/24 tax year, then you will receive a review form only because you are not renewing your claim. This will help HMRC finalise your claim for 2023/24. This form will have a black line on the front of it.

If you had more than one claim in the 2023/24 year, you might receive forms for each claim. It is important that you fill them all in.

If you have not received your renewal forms by the end of June – you should contact HMRC’s tax credits helpline on 0345 300 3900 (Relay UK, dial 18001 then 0345 300 3900).

Auto-renewals

Some people will receive just a TC603R auto-renewal form. This will show the circumstances from the tax year just ended and income figures that HMRC hold. It may show a range of income. If your circumstances have not changed and the income information is correct, then you do not need to take any action – your claim will automatically renew. The TC603R also acts as your award notice for the new tax year.

It is very important that you check the income figures that HMRC show on the form because you may be able to make certain deductions from your income for tax credit purposes. Read the notes that come with your renewal form.

HMRC will decide whether you fit the criteria to be an auto-renewal case. Some awards are not suitable for auto-renewal – for example if you are self-employed, have several sources of income, have reported several changes or if HMRC are aware you have received certain statutory payments. In those cases you are likely to receive a reply-required renewal which means you need to fill in a declaration form.

  Your renewal paperwork may be different each year – you should check it carefully and follow the instructions given.

Reply-required renewals

If you are not an auto-renewal case, you will receive both forms. You must reply to the TC603R and complete and return TC603D with details of your income for the ‘current year’ (the tax year that has just finished). You must normally do this by 31 July unless a different date is shown on your award notice.

If you have made more than one claim during the current year, for example, because you started the year as a single claimant then became a joint claimant with a new partner, you must complete a set of forms for each claim, even if they each show the same information.

From 6 April 2010 one member of a couple has been allowed to finalise the previous year’s claim and renew the claim for the period between 6 April and the date of separation. If only one member responds, the award will be based on the information provided, which may not be accurate. HMRC have advised that, where possible, it is still recommended that both members send back their forms, although failure to do so will no longer result in an overpayment provided one partner has done so.

It is important that you complete and return renewal papers when required to do so. You may receive text message reminders from HMRC – these are only to remind you that you need to complete the renewals process by 31 July and will not ask you for any personal details.

Income information provided by HMRC

HMRC now use information from the tax system (called ‘Real Time Information’) to help with the renewals process. Employers and pension providers have to send data to HMRC electronically each time the pay their employees and HMRC collect that data together.

Tax credit renewal forms might show the income figure that HMRC hold for the 2023/24 tax year from your employer(s) or occupational pension provider. There are a few things you need to be careful of with the income figures:

• You must check that the figure is correct and that your employer has not sent the wrong information to HMRC.
• You need to check that the figure is the right one for tax credits. Your employer may have sent the correct information to HMRC but not all income that employer’s report is taken into account for tax credits. For example, you might be able to deduct £100 a week for any weeks of statutory maternity, paternity, shared parental leave or adoption pay. You might have self-employed losses to set against your household income or have mileage allowance deductions, allowable work expenses or extra pension contributions. See our tax credits income section for more information or read the notes that come with your renewal form.
• The forms will only show one figure for employment – so if you have income from more than one employer it may be difficult to check.

If you think the income information is incorrect or that you can make some deductions from the figures, you should contact HMRC to ask them to change the income. If HMRC refuse to do so, you need to wait for the final award notice for 2023/24 and the new award notice for 2024/25 and ask for a mandatory reconsideration to start the appeal process. See our appeals section for more information.

How to renew

You can renew in four different ways. These are:

• going online through GOV.UK. This service is available even if there are changes to report.
• using the HMRC app (which is free to download)
• phoning HMRC's tax credits helpline on 0345 300 3900 (NGT text relay if you cannot hear or speak on the phone: dial 18001 then 0345 300 3900.). The line gets very busy in the run up to the deadline of 31 July so it is worth trying to do this as early as possible. HMRC's helpline opening times are shown on GOV.UK.
• sending your completed renewal form back in the post. It is advisable to keep a copy and send it recorded delivery or ask for a proof of postage.

If you make a mistake with your renewal you can use the online system to send the information again or phone HMRC’s tax credit helpline a long as it is before 31 July.

HMRC’s online service

You can renew your tax credits online. For security, it is important you access the service only through the Personal Tax Account or via the manage your tax credits service via the GOV.UK website. You can also use the HMRC app, which is free to download.

You will need a Government Gateway account to use the ‘manage your tax credits’ service. If you do not already have one, you will get one when you sign in the first time. Signing in will also activate your personal tax account which you can then use to check your HMRC tax and national insurance records. You will need to have a mobile phone or landline number to complete security when logging in.

You can read more information about accessing HMRC digital services in our digital services section.

Some features of the online service include:

• The service has a save and return function which means you can start and then come back within 28 days and complete it.
• Confirmation that you have submitted your renewal – at the end of the process there is a  confirmation screen that gives you an individual reference number, tells you about any outstanding actions that are still needed (for example if you have given an estimate of income and you still need to report the actual income by 31 January 2025) and how you can track progress of your renewal. We recommend that you print this page for your records.
• You can track the progress of your renewal through the 'manage your tax credits' service. You can also find out when your next payment is due and how much it is.
• If you have made a mistake or have new information to provide, you can complete the process again as long as it is before 31 July 2024
• You can report most changes of circumstances through the service (although see below if you are reporting that you have separated from your partner and wish to make a new single claim).
• Once you have completed the process, you can enter an email address to receive a copy of the confirmation receipt. We recommend you do this and keep it somewhere safe.

Although the online system can be quicker than post or waiting to get through on the phone you need to ensure you read the guidance notes that come with your renewal form as the questions on the online system can sometimes be misleading when read alone. We recommend that you read the notes especially for the following questions:

• Your earnings for the tax year 2023/24 – The online system may ask you how much you earned ‘before anything was taken off’ and advises you use the total pay or total for the year amount from your P60 to find that information.

There are lots of deductions that you can make from the income figure on the P60 for tax credit purposes including certain pension contributions, Gift Aid contributions, brought forward trading losses, the first £100 a week of statutory maternity, paternity, adoption and shared parental pay, certain work expenses and subscriptions. There are working sheets in the TC603RD notes to help you.

Despite what the questions says, you should make sure to enter your income after any deductions into the box on the online system.

• Company benefits: the online system tells you to add up the benefits you receive that are shown on your P11D. However, not all benefits on the P11D should be included. See Working Sheet 2 in the notes to help.
• If you have ‘other’ income such as pension income, foreign income or property income, the system will automatically deduct the £300 disregard. This disregard should only be applied once even if both you and your partner have other income.
• If you are using the change of circumstances service to report a change to childcare costs make sure you read leaflet WTC 5 for help to work out your average childcare costs and not just the amount you pay your childcare provider in a week as indicated by the online system.
• If you received any coronavirus payments – you should check carefully whether you need to include them as income for tax credit purposes.

Provisional payments

So long as you return your renewal papers/complete your renewal by the deadlines shown below, claims are treated as made from the beginning of the new tax year and are backdated to 6 April.

While the renewal process is going on, you will generally continue to be paid on the basis of your last known income and circumstances in the current year (that is, the tax year just gone). In some cases, HMRC will use more up to date income figures from the tax system to estimate your income so your payments can vary. These run-on payments are known technically as provisional payments.

When the renewal process is complete, provisional payments are replaced by payments under an initial award for the new tax year.

The deadline for return of renewal papers that finalise the 2023/24 tax year is the date specified on the renewal papers (in most cases this will be 31 July 2024).

If you cannot supply firm details of your 2023/24 income by the deadline stated on the renewal papers (in most cases 31 July 2024), for example if you are self-employed and are still waiting for your accounts to be finalised, an estimate is acceptable.

The important thing is to return an estimate by that date. If you give an estimate, you should confirm it, or supply actual figures, by 31 January 2025 (which is also the online filing deadline for Self Assessment).

Missing the deadline

If you do not renew (either by sending the papers to HMRC or renewing via the telephone or online/HMRC app) by 31 July 2024 (or the date on your renewal papers if different), then your award may be terminated.

Failure to renew means that no new claim is made for 2024/25. Consequently, any provisional payments received from April 2024 will be overpaid (because there is no claim) and HMRC will seek to recover them via direct recovery.

In addition, any other overpayments that were being recovered from the ongoing award will switch to direct recovery when your award is terminated for non-renewal.

If HMRC terminate your award for failing to renew (and consequently stop all payments), regulations allow the claim to be restored provided you do renew within 30 days from the date on the notice telling you that your payments are to be stopped (technically called the Statement of Account).

Outside of this 30-day period, the claim can only be restored if you can show HMRC you have ‘good cause’ for failing to renew by the deadline and within the 30-day grace period, so long as you do complete your renewal by the later deadline of 31 January 2025.

In both cases, restoration means that HMRC treat your renewed claim as being made from 6 April 2024.

If your claim cannot be restored, all provisional payments paid to you from 6 April 2024 will be treated as overpaid and you will have to make a fresh claim for further support, which will have to be for universal credit or pension credit, depending on your age.

Now that universal credit is available across the UK, HMRC state it is no longer possible to make a brand new claim for tax credits, see our moving to universal credit section. The only exception to this is for certain people who are granted refugee status. However, if you have been receiving tax credits and have been sent a renewal pack, providing you renew within 30 days of the statement of account, you will be able to have your claim for tax credits accepted (unless you have started to claim universal credit). If the renewal is made by 31 January 2025 and HMRC accept that you have good cause for missing the 31 July 2024 deadline and the additional 30 day restore period, they will reinstate your tax credit renewal claim from the previous 6 April or, if you have claimed universal credit in the meantime, up until the day before your universal credit award starts.

To summarise:

• Provisional payments are made at the start of 2024/25 while renewal papers are being sent out and dealt with. These are based on last known income and circumstances.
• When papers are returned, claimants get an initial award and payments are brought up to date.
• Renewal must be completed by 31 July 2024 with either a statement of actual income for 2023/24 or an estimate.
• If an estimate is given, this must be confirmed – or actual figures returned – by 31 January 2025.

Withdrawing from the system

The consequence of not completing the renewal is set out above. Generally, this means that all payments between April and the date HMRC terminate the claim (for failure to complete the renewals process) become overpaid.

There are rules that allow claimants to withdraw from the system by only finalising their previous year award and not renewing their claim for the current tax year. Claimants can respond to declaration papers to this effect.

However, we would urge caution to claimants who have received any payments in the new tax year (since April 2024) as it is likely that by not renewing the claim for tax credits, these payments will become overpayments.

HMRC have confirmed, in leaflet WTC2, that if claimants inform them after 31 July that they wish to leave the system, their claim will continue to the end of that tax year but they will not receive provisional payments in the next tax year, nor will their claim be renewed.

In addition to allowing claimants to ask for their claim not to be renewed in their renewal declaration, HMRC also run an exercise to withdraw tax credit claims for people who have received nil awards.

Under this process, if you have had a nil award for a long period of time, HMRC will send a letter (TC1015) to you to explain that HMRC will no longer automatically renew your claim unless, by the date specified in the letter, you specifically contact HMRC to request that your claim is indeed renewed. If you receive one of these letters from HMRC and do not make a relevant request (ie write to or phone HMRC by the date set out in the letter to say you wish to renew your claim), your claim will lapse on 5 April. You will not be able to claim tax credits again.

Penalties

In addition to the clawback of all provisional payments made to date, there may be financial penalties for not responding to a renewal notice, or for giving the wrong information in response to it.

Universal credit leaflet

HMRC have included a leaflet/flyer in this year’s renewal pack with some information about universal credit. It is for information only and you don’t need to do anything with it. DWP and HMRC think that some people will be better off under universal credit and they are raising awareness about universal credit so that people who will be better off can think about claiming universal credit now, rather than waiting to receive their formal migration notice inviting them to claim universal credit by a deadline as part of the formal migration exercise.

  Before doing this, speak to a welfare rights specialist: you should first understand what universal credit might mean for you. As soon as you make a claim for universal credit, your tax credits will stop and you won’t be able to claim again even if you are not entitled to any universal credit. If you choose to claim universal credit, without waiting to receive a migration notice inviting you to claim by a deadline, you will not be eligible for any transitional protection.

  This leaflet is not a migration notice, it is just to tell you more about universal credit. 

To find out how universal credit may affect you – see our moving to universal credit section.

Moving to universal credit and in-year finalisation

If you have claimed universal credit in the same tax year as you claimed tax credits or if you receive your migration notice but don’t make your claim for universal credit on or before the deadline date, your tax credits claim will stop (if it has not already) and HMRC will finalise your tax credit award in-year. This process, called in-year finalisation, is quite different to the existing tax credits renewals and finalisation process explained on this page. There is more about the in-year finalisation process in our moving to universal credit section.

Normally, this in-year finalisation process is carried out within 30 days of your tax credits award ending. Although in previous years HMRC did delay finalising tax credit claims for people moving to universal credit during the renewals period, we understand that in-year finalisation will now usually continue throughout the normal renewals period. If you claim universal credit after 6 April but while you are still receiving provisional tax credit payments, you will receive normal renewal papers that you must complete as well as, although not necessarily at the same time, further paperwork to in-year finalise your tax credits claim from 6 April of the current year. You must follow the instructions on all paperwork received from HMRC.