Every HMRC change you must tell the taxman or risk £3,000 fine

Man holding money
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Hundreds of thousands of people on benefits are being warned they could lose money - or risk being fined. HM Revenue and Customs has sent letters out to 730,000 people warning time is running out to notify them of any changes in their circumstances.

Anyone who has had changes in their lifestyle, whether it is finding a new job, having a new partner move in or children leaving home or school, must tell the taxman if the change could affect their claim. And they are being warned they have just weeks to do it in with a deadline looming of July 31.

Anyone who fails to notify the changes could lose tax credits and end up with less money in their accounts. The tax credit system is set to be replaced with Universal Credit next year with most people having already made the switch to Universal Credit.

However thousands remain on the old benefit and must report the changes. Andy Wood, tax expert from Tax Natives said: "If you are a tax credit claimant, you should inform HMRC of any changes in your circumstances, such as changes in living arrangements, childcare situations, or employment status.

"Failure to do so could result in major financial consequences, such as loss of tax credits or fines of up to £300. Non-compliance with reporting requirements can have serious repercussions such as loss of tax credits, repayment demands, and even fines of up to £3000 if incorrect information is provided."

You must tell HMRC immediately if your:

  • Living circumstances change, for example you start or stop a relationship, move in with a new partner, get married or form a civil partnership, permanently separate or divorce

  • Child or partner dies (you do not need to tell HMRC if you’ve already used the Tell Us Once service)

  • Child stops going to childcare for four weeks or more when they would normally go

  • Childcare costs stop, go down by £10 or more a week, or you start getting help with them

  • Child leaves home, for example moves out or goes into care

  • Child is taken into custody

  • Child over 16 leaves approved education or training, or a careers service

  • Childcare provider is no longer registered or approved

  • Working hours fall below 30 hours a week (combined if you’re in a couple with children)

  • Working hours fall below or go above the minimum required to qualify

You must also tell HMRC straight away if you:

  • go abroad for 8 weeks or more

  • leave the UK permanently or lose the right to reside in the UK

  • start working for less than 16 hours while claiming childcare costs - except in certain situations

  • have been on strike for more than 10 consecutive days

According to the HMRC website failure to do so could prove costly. It warned: "If you receive tax credits you’re not entitled to, you’ll need to repay the money. You may also have to pay a penalty."

It added: "You must report these changes within 1 month. If you report changes as soon as they happen, you’re less likely to be paid the wrong amount.

"You could be fined up to £300 if you do not report certain changes within 1 month, and up to £3,000 if you give wrong information. If you estimated your income when you renewed your tax credits - for example because you’re self-employed - tell HMRC your actual income by 31 January."

You should also tell HMRC as soon as possible of a number of other changes. You should tell HMRC as soon as you:

  • have any change in income (report this immediately if it goes up or down by £2,500 or more)

  • increase your working hours to 30 hours or more a week (combined if you’re in a couple with children)

  • have a baby or take responsibility for another child

  • start or stop claiming benefits for yourself or a family member, or those benefits change

  • start or stop having a disability that puts you at a disadvantage in getting a job

  • get certification that your child is blind or their certification ends

  • start paying for registered or approved childcare

  • stop getting help with childcare costs

You should report these changes within 1 month to make sure you get everything you’re entitled to. Payments cannot usually be backdated any further than this.

Claimants should have received a renewals pack by June 15 but anyone who has not received one should contact HMRC to check the issues and avoid potential delays. Some people might have their claim automatically renewed.

Andy Wood advised: "If you’re eligible for automatic renewal, check for the specified code 'TC 603 R' and accompanying letter in the renewal pack. This streamlines the process and minimises the burden, ensuring continued receipt of tax credits without unnecessary delays. Your tax credits will be automatically renewed if your renewal form has the code 'TC 603 R'."

He added: "You are required to review your renewal pack and report any changes to HMRC by the end of July. These changes include living arrangements, childcare situations, and employment status. For instance, if childcare costs decrease by £10 or more per week, or working hours fall below 30 hours per week (combined for couples with children), report it to maintain the accuracy of the tax credit claim."