New Tax Credits payment warning to 730,000 people ahead of important letters due this month

HM Revenue and Customs (HMRC) has announced that around 730,000 Tax Credits customers will start receiving their annual renewal notices through the post from this week. Packs will be issued between May 2 and June 19, but not everyone will need to take action.

HMRC said the vast majority of Tax Credit claims will be automatically renewed - these will be the notices with a black stripe on them - while claimants who receive a notice with a red stripe will need to renew. However, it’s estimated that fewer than 10,000 people will need to check their information and renew their claim.

HMRC warned that anyone who fails to renew their Tax Credit claim by the deadline on July 31, 2024 could see payments stop. The quickest and easiest way for people to renew their Tax Credits is on GOV.UK or on the free and secure HMRC app, which also allows customers to track their claim and find out when they can expect payments.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Tax Credits are valued by many families for their essential contribution to the monthly family budget, so to avoid payments being stopped please respond to HMRC by the 31 July deadline.”

Reporting a change of circumstances

If there is a change in someone’s circumstances that could affect their Tax Credits claims, they must report the changes to HMRC.

These include:

  • Living arrangements

  • Relationship changes

  • Childcare

  • Children leaving home

  • Working hours

  • Income - increase or decrease

A full list of what changes need to be reported can be found on GOV.UK here.

Missing the renewal deadline

HMRC warns that customers who fail to renew by the deadline on July 31, risk their payments being stopped and having to repay any overpayments.

The 2024 to 2025 Tax Credits notices may show predicted payments for the tax year 2025 to 2026 - these are automatically generated and should be disregarded.

It’s also important to be aware that Tax credits are ending on April 5, 2025 and being replaced by Universal Credit. The Department for Work and Pensions (DWP) will send out a Migration Notice when it is time to claim Universal Credit.

When you are likely to be asked to move to Universal Credit

The DWP has published a timetable on when they can expect to receive a Managed Migration Notice. DWP said that people who receive a letter but don’t act within three months risk losing their current benefit entitlements.

When you are likely to be asked to move to Universal Credit

Legacy Benefit

Manage Migration Letters Issued

Tax credits with Housing Benefit

From April 2024

Income Support only

From April 2024

Income Support with Housing Benefit

From April 2024

Income Support with Tax credits

From April 2024

Income Support with Housing Benefit

From April 2024

Housing Benefits only

From June 2024

Income-related ESA with Child Tax credits

From July 2024

Tax credits (pension age)

From August 2024

Income-based Jobseekers Allowance

From September 2024

ESA only

You will not be asked to move to Universal Credit until a later date

ESA with Housing Benefit

You will not be asked to move to Universal Credit until a later date

DWP guidance on GOV.UK warns: “It is important that you do not do anything until you receive your letter. You will not be moved automatically. Once you’ve received your Universal Credit Migration Notice letter, you’ll need to make a claim for Universal Credit to continue to get financial support. There will be a deadline in your letter.

“This is three months from the date the letter was sent out. Your current benefits will end as soon as you submit your claim for Universal Credit and you will not be able to go back to your existing benefit once you have claimed.”

Transitional Protection Payments

Transitional Protection payments are an additional amount to help with your move to Universal Credit. The payment will make up the difference if your Universal Credit entitlement is less than your previous tax credits or benefits.

If eligible, this protection means you can:

  • get a Transitional Protection payment added to your Universal Credit entitlement if you receive more from your previous Tax Credits or benefits

  • claim Universal Credit and have money, savings and investments over £16,000 for 12 assessment periods, if you receive Tax Credits

  • claim Universal Credit if you’re a full-time student in higher education until you or your partner finish the course

Eligibility for Transitional Protection

You do not need to apply for Transitional Protection - but to qualify for it, you must make a claim for Universal Credit before the deadline date on the Migration Notice letter.

The Migration Notice letter will be from the DWP and invite you to make a claim for Universal Credit.

Help to claim

People can claim Universal Credit directly online or via the dedicated Universal Credit Migration Notice helpline for free on 0800 169 0328 or by visiting your local Jobcentre Plus.

For those who need additional support to complete their application, Citizens Advice Scotland’s Help to Claim service provides free, confidential and impartial advice along with a step-by-step guide to the claims process.

Find out more on the website here.

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