The tax credits guide

Finances The tax credits guide For families with disabled children Introduction This leaflet is a general guide to tax credits for families with disabled children. It includes information on who qualifies and how the tax credits system works in practice. We ve also included ready reckoner tables to give you an idea of how much you should get. Tax credits are nothing to do with income tax. They are regular payments made by the government to families on low to middle incomes. You can claim tax credits even if you don t pay tax. If you would like a full breakdown of your likely entitlement or any other information on tax credits, please call our freephone helpline. We employ welfare rights specialists who can provide detailed advice on any aspect of a tax credit claim. Contents What are tax credits? 2 Who is included in a claim? 2 Tax credits and families on Income Support 3 Can I claim Working Tax Credit? 3 Can I claim Child Tax Credit? 6 How are tax credits paid? 6 What is taken into account in calculating my tax credit award? 7 How much tax credit will I get? 8 How do I claim tax credits? 13 At the end of the tax year 13 Changes of circumstances during the tax year 14 What happens if I have been overpaid tax credits? 15 How can I get a tax credit decision changed? 17 Forthcoming changes to tax credits 18 Tax credits and other help for families on low incomes 18 Contacts for further information and advice 19 The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 1

What are tax credits? There are two tax credits offering financial support to families: Working Tax Credit can be claimed by anyone who works for a set number of hours and is responsible for a child. Certain other workers who don t have children can also apply. Child Tax Credit can be claimed by families with children, whether they work or not. Tax credits are administered by Her Majesty s Revenue and Customs (the Revenue) and, depending on your circumstances, you could qualify for either or both. Introduction of Universal Credit The government plans to replace tax credits with the Universal Credit, a new means-tested benefit for working age people. At the time of writing, the national roll out of Universal Credit only applies to new claims by single working people. Families with children making new claims are being asked to claim Universal Credit in some Jobcentre areas but for the time being this does not apply to families who have a child on DLA/PIP or who is severely visually impaired. However, this will change over time as Universal Credit is extended to more groups of new claimants. Existing tax credits claimants are not expected to be moved onto Universal Credit until some point after April 2016. Call our freephone helpline for more information. 0808 808 3555 helpline@cafamily.org.uk Who is included in a claim? You can claim for a child who normally lives with you until the September after their 16th birthday. You can also claim until they are 19 if they are in: full-time, non-advanced education certain types of unwaged work-based training, or study programmes for 16-19 year olds (in England only). This can be extended up to the young person s 20th birthday, so long as they re completing a course of education or training they started, or were accepted onto before they turned 19. If a young person starts to claim certain benefits in their own right (such as Income Support, incomebased Jobseeker s Allowance, Employment and Support Allowance or Universal Credit), this means you can no longer get tax credits for them. Call our freephone helpline for advice on this issue. Figures used in this guide The figures used in this guide are based on tax credit rules and rates announced by the government for the year April 2015 2016. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 2

Telling the Tax Credit office if a young person is staying in full time non-advanced education or training The Tax Credit office always assumes that a young person who is turning 16 will leave education in the summer following their 16th birthday. They will automatically stop tax credits for them from the end of August unless you tell them your child will remain in full time non-advanced education or start certain types of approved training (including a study programme in England). You need to tell the Tax Credit office about this even if you have already notified the Child Benefit office. You must also tell the Tax Credit office if your child: turns 18 and stays in non-advanced education or training, and turns 19 and stays in non-advanced education or training. Otherwise the Revenue are likely to assume that your son or daughter is leaving education when they turn 18/19 and reduce your payments accordingly. Tax credits and families on Income Support Child Tax Credit is paid instead of payments for children in Income Support (IS) and income-based Jobseeker s Allowance (ibjsa). New claims for IS/ibJSA only include amounts for the claimant and their partner. You need to make a separate Child Tax Credit for any children. Can I claim Working Tax Credit? To claim Working Tax Credit (WTC) you must be: at least 16 years of age living in the UK and not subject to immigration control (with some exceptions) working for a required number of hours. Lone parents If you are a lone parent you must be working at least 16 hours a week. Couples Couples with dependent children are normally expected to work at least 24 hours a week. These hours can either be worked by one partner or shared between you, as long as one person is working at least 16 hours. Exception to the 24 hour rule for couples Some couples, including certain carers can claim Working Tax Credit if they work for 16 23 hours a week in total. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 3

You are exempt from the 24 hour rule if you are a couple with a dependent child and: one partner works 16 hours or more and the other partner is entitled to Carer s Allowance. This applies not only where you recieve Carer s Allowance but also where you have an underlying entitlement to this benefit (that is, you have claimed Carer s Allowance but are not actually receiving payments because you get another benefit instead), or one partner works at least 16 hours and the other partner is incapacitated, or in hospital or in prison, or the working partner is either a disabled worker or someone aged 60 or over and they are working at least 16 hours. This latter group of couples can claim Working Tax Credit even if they have no dependent children. Note: Some other workers without children can claim Working Tax Credit. If you don t care for a child, seek advice from a local citizens advice bureau (CAB) or welfare rights service. How to count the number of hours you work The Revenue counts the hours you normally work, ignoring unpaid meal breaks. If: you work overtime most weeks, the extra hours will be included you are self-employed you will need to show not only that you normally work the required number of weeks, but also that you are trading on a commercial basis, with a view to achieving profits. Your self-employment must also be structured, regular and on-going. There are special rules to allow some people to qualify for Working Tax Credit who have temporarily stopped working. These rules include: term-time only workers women on Statutory Maternity Pay/Leave or Maternity Allowance some people on Statutory Adoption or Paternity Leave or shared parental leave, and some people who are off work sick. Contact our helpline for more details. If you stop working or reduce your hours to below the required number You can continue to receive Working Tax Credit for four weeks. But you must tell the Revenue about this change in circumstances within one month. Extra help from Working Tax Credit towards childcare costs If you spend money on childcare when you work, your claim for Working Tax Credit may include help with eligible childcare costs. For childcare costs to be taken into account, you must either be: a lone parent who works at least 16 hours per week, or a couple who both work 16 hours or more a week, or a couple where one member of the couple works 16 hours or more a week and the other is entitled to Carer s Allowance, or a couple where one member works 16 hours or more a week and the other receives certain disability or incapacity benefits (or they are in hospital or prison). The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 4

What type of childcare costs can be taken into account? Only registered or approved childcare can be taken into account. This includes registered childminders, nurseries and other schemes run by approved providers. Care in the child s own home can also be counted if it is provided by someone who is registered or approved. Childcare provided by a relative in the child s home is not counted, even if the relative is a registered childcarer. Depending on where in the UK you live, you may also be refused help with the costs of registered childcare provided by a close relative in their own home. Seek further advice from our helpline. How long can I get help with childcare costs? If a child is on Disability Living Allowance (DLA) or Personal Independence Payment (PIP) or registered blind, childcare costs can be included until the September after their 16th birthday. Otherwise childcare costs can only be included until the September after their 15th birthday. How much help with childcare costs can I get? The maximum amount of childcare that can be taken into account is: 175 per week for one child, and 300 per week for two or more children. Only 70 per cent of childcare costs can be met. This means the most that can actually be paid towards childcare costs is: 122.50 a week for one child (70 per cent of 175), and 210 a week for two or more children (70 per cent of 300). These are the maximum amounts payable the actual amount you will get depends on your income and family circumstances. If I get extra tax credits towards my childcare costs will this affect any Housing Benefit or Council Tax Benefit I get? Always tell the office that pays your Housing Benefit or Council Tax Benefit about any changes to your tax credit payments. In most cases these benefits will not be reduced if you start getting extra tax credits towards childcare costs. This is because of a special earnings disregard that is linked to your childcare costs. However, no special earnings disregard applies if you are a couple where one partner works 16 hours per week and the other is entitled to Carer s Allowance. Couples in this category are likely to find that the extra tax credits they get towards childcare leads to a reduction in Housing and Council Tax Benefit payments. For more detailed information on eligible childcare costs call our freephone helpline. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 5

Can I claim Child Tax Credit? To claim Child Tax Credit, you must be: aged 16 years or over, and responsible for one or more dependent child, and living in the UK, not be subject to immigration control and have the right to reside in the UK in addition, people entering the UK usually have to be present in the UK for three months before they can claim Child Tax Credit. However, certain groups are exempt from this three month test call our freephone helpline for further details. You can claim Child Tax Credit whether you are in work or not, and: it is paid in addition to Child Benefit it can be paid by itself or alongside Working Tax Credit. If your child gets DLA or PIP The amount of Child Tax Credit that you receive is higher if you have a dependant child or young person on Disability Living Allowance (DLA) or Personal Independence Payment (PIP). This is because an extra amount, known as the disabled child element, is added to your tax credit calculation for each child who gets DLA or PIP or who is registered blind. If your child gets the high rate of the DLA care component or the daily living component of PIP at the enhanced rate, a further severely disabled child element is also added. Always tell the Tax Credits office if your child starts to get DLA or their award goes up so they can add these elements to your award. How are tax credits paid? Working Tax Credit is paid to the parent who is working, except for any childcare costs. Child Tax Credit, and any Working Tax Credit towards childcare costs are paid to the child s main carer. Payments are usually made into a bank account. You can choose to receive weekly or four-weekly payments. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 6

What is taken into account in calculating my tax credit award? The amount of tax credits that you receive depends on your family s personal circumstances and on your annual income. The personal circumstances taken into account are below. For Working Tax Credit, whether: you are a lone parent or a member of a couple you work 30 hours or more a week (it is usually possible to add your and your partner s hours together) you have a disability you or your partner get the high rate DLA care component, the enhanced rate of PIP daily living component or the Armed Forces Independence Payment you have eligible childcare costs. For Child Tax Credit, the number of: dependent children you have children who get any rate of DLA, PIP or are registered blind children who get high rate DLA care component or the enhanced rate of the PIP daily living component. Calculating income Your entitlement to tax credits also depends on your annual income: if you are a part of a couple, your partner s income is also counted a dependent child s income is never counted. A tax credit award is usually assessed on the income from the previous tax year. However, if your income for 2015/16 is likely to exceed your income in 2014/15 by more than 5,000, the Tax Credit Office will use your current year s estimated income to calculate your award, minus 5,000. If your annual income drops by 2,500 or less than the previous year, your award will still be based on your previous year s income. If your income drops by more than 2,500 your award will be based on your current year s income plus 2,500 (that is, on a figure that is 2,500 higher than your actual income this year). What income counts? Annual income before tax is counted. As a general rule, income that is taxable is taken into account. This includes: gross earnings (this is earnings before deductions for tax and national insurance, but less any pension contributions) taxable profits from self-employment some social security benefits including Carer s Allowance (see below for those not counted) income from property income from capital pensions (state, private and occupational) other income subject to income tax. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 7

What income is not counted? Some income is completely ignored for tax credit purposes. This includes: maintenance payments most forms of student income adoption and fostering payments (but not any reward element) Disability Living Allowance Attendance Allowance Personal Independence Payment Armed Forces Independence Payment Child Benefit Guardian s Allowance Income Support Income-based Jobseeker s Allowance Income-related Employment and Support Allowance Bereavement Payment Maternity Allowance the first 100 per week of any Statutory Maternity, Statutory Paternity or Statutory Adoption Pay Severe Disablement Allowance transitional long-term Incapacity Benefit (that is, in payment since before 13th April 1995) Industrial Injuries Benefit Universal Credit. This list is not exhaustive and some other forms of income are also ignored. Call our helpline for details. What if I have a lot of capital or savings? There is no capital limit preventing a claim for tax credits. Instead any taxable income you get from your capital is counted, for example, interest on your savings (unless they are in a tax free savings account like an ISA). How much tax credits will I get? The Revenue uses your family s circumstances to work out a maximum tax credits entitlement. If you get: Income Support income-based Jobseeker s Allowance income-related Employment and Support Allowance, or Pension Credit you are automatically entitled to the maximum amount of tax credits. If not, you need to compare your annual taxable income to a set threshold: 16,105 if you are only eligible for Child Tax Credit, and 6,420 if you are also eligible for Working Tax Credit. If your income is at or below the threshold, you ll get the maximum tax credits for your circumstances. If your income is higher than the relevant threshold, the award will be reduced. For every 1 of income you have above the threshold, your maximum tax credits entitlement is reduced by 41p. Is there a limit to how much I can earn and get tax credits? Although tax credits are income-based, you should not assume that you have too much money to qualify. For example if you have a large family or high childcare costs you can still qualify for tax credits even if your income is over 50,000. Use our ready reckoner tables to get an idea of how much tax credits you might receive. Even if your income means that you don t qualify for tax credits, it is still worth making a claim. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 8

Although you will get a decision saying that you have a nil award, this will protect your right to backdating of tax credits in the event that your income unexpectedly drops later in the year. Using the tables The following pages include some ready reckoner tables to help you estimate the amount of tax credits you might get. Although tax credits are usually calculated as an annual award, the tables show the weekly equivalents. All amounts are rounded down to the nearest pound. Remember your award is normally based on your previous year s income. A child is classed as disabled if they are registered blind or they are in receipt of Disability Living Allowance or Personal Independence Payment at any rate. If neither you nor your partner work the necessary number of hours to be eligible for Working Tax Credit Use Table 1. There are separate columns depending on the number of children you have and how many of them are disabled. Use the appropriate column to get an idea of how much tax credit a family in your circumstances might get (remember weekly amounts are used). If you or your partner work the necessary number of hours See earlier section Can I claim Working Tax Credit on page 3. The table you should turn to depends on the number of children you have and how many of them are disabled. If you have one child and they re disabled, use Table 2. If you have two children and one of them is disabled, use Table 3. If you have two children and both of them are disabled, use Table 4. If you have three children and one of them is disabled, use Table 5. If you have three children and two of them are disabled, use Table 6. Table notes *Table1 note: If you have a child in receipt of the high rate of DLA care component or PIP daily living component at the enhanced rate, you may qualify for higher payments. **Tables 2,3,4,5 and 6 notes: These tables assume that families with incomes of 15,000 and above are working for 30 hours a week or more. Higher payments may be made to families with a disabled worker or with a family member on the high rate of DLA care component or enhanced rate of the PIP daily living component. What if you pay for childcare? The amount of tax credits you receive may be higher if you are paying for eligible childcare. Tables 2 to 6 have extra columns showing the tax credit award parents might get when they re paying the maximum amounts towards eligible childcare. See Extra help from Working Tax Credit towards childcare costs on page 4 for when childcare is counted. You can t get help with childcare costs if you are only eligible for Child Tax Credit. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 9

Table 1: Eligible for Child Tax Credit only* Annual taxable income Family with one child who is disabled Family with two children, one is disabled Family with two children, both are disabled Family with three children, one is disabled Family with three children, two are disabled 16,105 and under Pounds per week 124 178 238 231 292 20,000 94 147 207 201 261 25,000 54 107 168 161 221 30,000 15 68 129 122 182 35,000 nil 29 89 82 143 40,000 nil nil 50 43 103 45,000 nil nil 10 3 63 50,000 nil nil nil nil 24 55,000 nil nil nil nil nil Table 2: Working family with one child, that child being disabled** Annual taxable income No eligible childcare costs Includes maximum childcare costs 6,420 or under 201 323 10,000 173 295 15,000 149 271 20,000 110 232 25,000 70 192 30,000 31 153 35,000 nil 114 40,000 nil 75 45,000 nil 35 50,000 nil nil 55,000 nil nil The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 10

Table 3: Working family with two children, one is disabled** Annual taxable income No eligible childcare costs Includes maximum childcare costs Includes maximum childcare for two or more children 6,420 or under 254 376 464 10,000 226 348 436 15,000 202 324 412 20,000 163 285 373 25,000 123 245 333 30,000 84 206 294 35,000 44 167 254 40,000 5 128 215 45,000 nil 88 177 50,000 nil 49 136 55,000 nil 9 97 Table 4: Working family with two children, both are disabled** Annual taxable income No eligible childcare costs Includes maximum childcare costs Includes maximum childcare for two or more children 6,420 or under 315 437 525 10,000 286 408 496 15,000 262 384 472 20,000 223 345 433 25,000 183 305 393 30,000 144 266 354 35,000 104 226 314 40,000 65 187 275 45,000 25 147 235 50,000 nil 109 197 55,000 nil 69 157 The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 11

Table 5: Working family with three children, one is disabled** Annual taxable income No eligible childcare costs Includes maximum childcare costs Includes maximum childcare for two or more children 6,420 or under 311 433 521 10,000 283 405 493 15,000 259 381 469 20,000 219 341 429 25,000 180 302 390 30,000 140 262 350 35,000 101 223 311 40,000 61 183 271 45,000 22 144 232 50,000 nil 105 193 55,000 nil 66 154 Table 6: Working family with three children, two are disabled** Annual taxable income No eligible childcare costs Includes maximum childcare costs Includes maximum childcare for two or more children 6,420 or under 368 490 578 10,000 340 462 550 15,000 316 438 526 20,000 276 399 486 25,000 237 359 447 30,000 198 320 408 35,000 158 280 368 40,000 118 240 328 45,000 79 201 289 50,000 40 162 250 55,000 Nil 123 210 The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 12

How do I claim tax credits? Child Tax Credit and Working Tax Credit are administered by Her Majesty s Revenue and Customs (the Revenue) and both are claimed on application form TC600 available from: Tax Credits Helpline 0345 300 3900 Textphone 0345 300 3909 You will need to provide details of your taxable income for the previous tax year. This information can be obtained from your P60, your payslips from work or from an annual statement of taxable benefit from the Department for Work and Pensions. Backdating tax credits Claims can only be backdated up to one month. Generally, the Revenue automatically consider backdating however, there have been cases where this has not happened. To ensure backdating is considered in your case, you should either attach a written backdating request to your claim pack or telephone the Tax Credits office to request it. Getting a decision on your claim Once the Revenue has processed your claim, they should send you an award notice. This will outline not only the amount of tax credits you are being paid but also the family circumstances your award was based on, (for example, your annual taxable income, the number of dependent children you have and the number of children classed as disabled). It is important that you check this information to make sure it s accurate. If it s not, then it could lead to either an underpayment or overpayment of tax credits. At the end of the tax year Once awarded, a tax credit payment normally lasts until the end of the tax year. The Revenue then carry out an annual review. They issue you with a review pack outlining the personal details used to calculate your existing award which you must check for accuracy. If you are sent a TC603R auto-renewal form your award will be automatically renewed. You only need to contact the Tax Credits office if the details in your review pack are incorrect. Everyone else must complete a declaration form and also confirm their annual taxable income for the year just ended. If you made more than one claim for tax credits during the previous year For example because you are separated from your partner and made a new claim as a single person. You will receive a separate review pack for each claim. You should complete each pack even if they ask for the same information. This must be done by a date specified on the form usually 31 July. This can be done by post, telephone or online at www.gov.uk/renewtaxcredits Once the Revenue gets confirmation of your details They will use it to calculate your tax credit award for the new tax year. They will also use the details to check whether you got the right amount of tax credits in the previous year. If you have been underpaid tax credits, you should get a lump sum for any arrears. If you have been overpaid tax credits, the Revenue may try to recover the overpayment, usually by reducing your award for the new tax year (see What happens if I have been overpaid tax credits on page 15). The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 13

It can take several months for the Revenue to receive confirmation of your details and to process your new award. Meanwhile, in the first few months of the tax year, they make provisional payments based on your last reported income and circumstances. Changes of circumstances during the tax year Although a tax credits award will normally run until the end of the tax year, it can be adjusted during the year if there is a relevant change of circumstances. Certain changes must be reported to the Revenue within one month or you will face a 300 penalty. These are: a change in the number of adults claiming (for example, going from a couple to a lone parent or vice versa). Your claim will come to an end and you must make a new claim as a lone parent or as a new couple a reduction in average childcare costs by 10 or more for at least four weeks in a row if you, or your partner, go abroad for more than eight weeks (12 weeks if you go abroad due to a family illness or bereavement) if you stop working the minimum number of hours required for Working Tax Credit (this is either 16 or 24 hours a week depending on your circumstances) if your working hours drop below 30 hours a week if you stop being responsible for a dependent child or young person, for example, if they are no longer normally living with you a young person in your family stops qualifying for tax credits. This might happen because a young person leaves full-time non-advanced education or because they start claiming Employment and Support Allowance, or Income Support in their own right if a dependent child or young person dies if you are a person from abroad and have lost your right to reside in the UK. Other changes of circumstances You don t have report any other changes of circumstances until the end of the year. It may be in your interest, though, to report some changes sooner. There is a one month backdating rule which means you may lose money if you delay telling the Revenue about a change that would increase your tax credit award (for example, having a new baby). The earlier section What is taken into account in calculating my tax credit award? on page 7 gives a brief overview of the kinds of circumstances that affect your award. Starting to get Disability Living Allowance (DLA) or Personal Independence Payment (PIP) for the first time or getting an increase in DLA/PIP There are some exceptions to the one month backdating limit. If your child is awarded DLA or PIP has an existing award of one of these benefits increased to the high rate for personal care or enhanced rate for daily living, this can lead to extra Child Tax Credit payments. So long as you notify the Tax Credits office within one month of getting the DLA/PIP decision, any extra tax credits will be backdated in line with the award of the disability benefit. You should take similar steps if you or your partner have health problems and get DLA/PIP in your own right. If a change in circumstances reduces your tax credit award, the reduction is always backdated in full. To avoid overpayments or underpayments, you should tell the Tax Credit office about any relevant changes in circumstances as they happen. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 14

Changes in income If you have a change in income, you can choose to tell the Revenue straight away or leave it until the end of the tax year. If your annual income increases, it will have no affect on your current year s award, unless it goes up by more than 5,000. However, the increased income will be counted for tax credits in the following tax year. Because of this, it is a good idea to tell the Revenue as soon as your income increases. If you choose to wait until the end of the year You run the risk of being overpaid provisional payments when you are waiting for the renewal of your claim (see At the end of the tax year on page 13). This is because your provisional payments for the early part of the new tax year will be based on an artificially low income. If your annual income in the current year drops by 2,500 or less This will not be taken into account until the start of the following tax year. If your income drops by more than 2,500 the Tax Credits Office will re-calculate your tax credits straightaway but when they do this they ignore the first 2,500 of the drop in your income (that is, they treat you as having an income that is 2,500 more than you actually receive). Ultimately, if you wish to avoid overpayments or underpayments of tax credits, it is in your interests to report significant increases or drops in income as they happen. What happens if I have been overpaid tax credits? If you have been overpaid tax credits, the Revenue will normally try to recover the overpayment by reducing your ongoing tax credit payments. How much they will recover depends on whether your overpayment occurred in a previous tax year or whether you have been overpaid in the current year. Overpayment in the previous year If you were overpaid in a previous year then HMRC will usually recover the overpayment by reducing your payments by 25%. However, the reduction should only be 10% if you qualify for the maximum amount of tax credits. Overpayment in the current year If you are overpaid in the current tax year, the Tax Credits office will reduce or even stop your payments altogether in order to prevent an overpayment building up during the remainder of the tax year. This means they can recover up to 100 per cent of your award. If the amount that they recover leaves you struggling financially, ask the Tax Credits office for urgent additional hardship payments, or them to use their discretion to reduce the amount they recover. If this is refused get advice about making a formal complaint and approach your MP to see if they will raise your case with HMRC. You should also contact your local authority to see if they can provide any financial help, for example via a local welfare grant scheme. Seek advice if you are told by the Revenue that you ve been overpaid or are likely to be overpaid. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 15

If the Revenue get it wrong The Revenue s own guidance says they should not recover any overpayment that is the result of them not having met their responsibilities, so long as you have met all of your responsibilities as a claimant. Your responsibilities include: providing them with accurate information notifying them of changes of circumstances checking your award notice for errors checking that the payments you actually receive match the payments shown on your award notice contacting the Revenue if you do not understand your award notice. If an overpayment was caused by an official error and you met all of your responsibilities, none of the money should be recovered. If it was caused by official error but you also failed to meet any of your responsibilities, the Revenue may still agree to write off part of the overpayment. You should always check your tax credits award notice to make sure the information they hold about you is correct. If there is an error in your award notice the Revenue expect you to notify them of this within 30 days. If you take longer than 30 days to notify them they are likely to try and recover any overpayment that had built up in the period before you notified them even if that overpayment was originally caused by their mistake. Exceptional circumstances The Revenue s guidance says that in exceptional circumstances they may agree not to recover an overpayment. For example, if your caring responsibilities prevented you from notifying them within 30 days of an error in your decision notice, you should argue that these are exceptional circumstances and ask them not to recover any overpayment. The Revenue also has the discretion not to recover an overpayment if you can show that this will cause you hardship. If you don t accept you ve been overpaid If you don t agree that an overpayment has occurred or disagree with the amount of the overpayment, you can ask them to reconsider their decision. If you are not satisfied with their revised decision you can then ask for an appeal. The Revenue will suspend recovery of an overpayment if you have requested a reconsideration or an appeal against their decision. If you do accept you ve been overpaid You cannot ask for a reconsideration/appeal of a Revenue decision to recover the money. Instead you can dispute their decision to recover it, using form TC846 available at www.hmrc.gov.uk/forms/tc846.pdf Try to do this within three months of the date of your finalised award notice. HMRC guidance says that they will only accept disputes made after three months in exceptional circumstances. If the Revenue insist on recovery, you can challenge this through their complaints procedure. If you are disputing the recovery of an overpayment the Revenue will normally continue to make deductions while they look into your case. However, if they find in your favour, they should refund the amount that they have already recovered and write off the remainder. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 16

How can I get a tax credit decision changed? The Revenue can revise a decision if: there is a change of circumstances they have made a mistake, or they think your award is wrong. In addition, if you disagree with a tax credit decision you also have the right to ask them to look at it again this is known as a mandatory reconsideration. You should do this in writing using form WTC/AP available at www.hmrc.gov.uk/leaflets/wtc_ap.pdf The time limit for asking them to do this is 30 days from the date of the decision, although a late request may be accepted in certain circumstances. If your request for a late reconsideration is not accepted by HMRC you have no right of appeal against their decision. Once they have looked at their decision again the Revenue will send you a mandatory reconsideration notice explaining whether they have changed their decision. If you are not happy with the outcome of a mandatory reconsideration then you can appeal their decision. How do I appeal? An appeal must be in writing and must be sent directly to HM Courts and Tribunals Service (HMCTS) using form SSCS5. You must also include a copy of the mandatory reconsideration notice with your appeal request. The appeal form asks you whether you want a hearing to be held where you (and your representative if you have one) get to put your case in person or whether you want your case to be decided without a hearing. It is always better to ask for a hearing as your chances of success are higher. Time limit for appealing Your appeal request must be received by HMCTS within one month of the date on the mandatory reconsideration notice. If your appeal is late you must include the reasons why this is the case. You can ask for a late appeal so long as less than 13 months have passed since the mandatory reconsideration. However, there is no guarantee a late appeal will be accepted, so you should always try and make sure you meet the usual one month deadline. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 17

Forthcoming changes to tax credits The government have announced a number of changes that will make tax credits less generous in the future. From April 2016 The income threshold for Working Tax Credit (that is, the amount that working parents can earn before their tax credit payments start to be reduced) is to be cut from 6,420 to 3,850. This means that working families with more than 3,850 will get less tax credits. In addition the taper rate at which tax credits are reduced as a result of income is also to be increased. Currently your tax credit payments are reduced by 41p for every 1 of excess income you have. This will increase to a reduction of 48p in the 1. From April 2016 only the first 2,500 of an increase in annual income will be ignored, rather than the first 5,000. This means more families will be at risk of an overpayment if their income goes up. Most tax credit elements (but not the disability or severe disability element) will be frozen for four years rather than increased with inflation. The amount that can be recovered from your tax credits for an end of year overpayment will be increased from 25 per cent to 50% of your award if your income is over 20,000. From April 2017 Limiting payments of the child element to the first two children. Normally the amount of tax credits you receive increases with your family size. This is because you receive an additional payment known as the child element for each child in your family. However, families will not receive an additional child element for a third or subsequent child born after 6 April 2017. This restriction will also apply to families claiming tax credits for the first time after April 2017. If a child has disabilities the tax credit award will still include a disabled child element (or severely disabled child element) for them but not the basic child element. New claims made after April 2017 will no longer include the family element this is a payment of 545 per year. Tax credits and other help for families on low incomes For detailed advice on how a tax credit claim will affect any of the benefits you currently get, please call our freephone helpline. Income Support (IS) and income-based Jobseeker s Allowance (ibjsa) Child Tax Credit replaces payments for children made with IS or ibjsa. See Tax credits and families on Income Support for more details on page 3. Housing Benefit and support with council tax Ongoing payments of tax credits are counted as income when calculating Housing Benefit (unless you re over Pension Credit qualifying age, in which case Child Tax Credit payments are ignored). However, payments for arrears of tax credits are often disregarded. In most areas similar rules apply to the treatment of tax credits payments under Council Tax Support schemes. But this can vary depending on the scheme in your council area. Call our freephone helpline for further advice. The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 18

Health benefits You can get full help with health costs if your annual income for tax credit purposes is less than 15,276 and you get: Working Tax Credit and Child Tax Credit Working Tax Credit with a disability element, or Child Tax Credit and you are not eligible for Working Tax Credit. Vouchers for free milk, fruit and vegetables If you are pregnant or have a child under four, get Child Tax Credit (but not Working Tax Credit) and have an annual income for tax credits is below 16,190, you should qualify for vouchers towards milk and fresh or frozen fruit and vegetables. You may also be able to get free vitamin supplements. This help is provided by the Healthy Start Scheme. Find out more from the Healthy Start Helpline 0845 607 6823 www.healthystart.nhs.uk Free school meals If you are entitled to Child Tax Credit (but not eligible for Working Tax Credit) and your annual income for tax credits is less than 16,190, you will be able to get free school meals. In Scotland, you can also get free school meals if you get Child Tax Credit and your annual income for tax credits is less than 16,105. You also qualify if you get Working Tax Credit alongside Child Tax Credit, but only if your annual income is less than 6,420. In Northern Ireland you can get free school meals if you get Working Tax Credit and/or Child Tax Credit and have an income for tax credits purposes of less than 16,190. Sure Start Maternity Grant and Funeral Grants You may be able to claim these if you meet certain qualifying conditions and get: Working Tax Credit with the disabled worker or severe disability element, and/or Child Tax Credit at a rate greater than the basic family element. Contacts for further information and advice If you would like further advice regarding tax credits or other social security benefits, please call the Contact a Family helpline. We have welfare rights specialists who can give you detailed advice about any aspect of claiming benefits and tax credits. Contact a Family helpline 0808 808 3555 (Monday to Friday, 9.30am-5pm) helpline@cafamily.org.uk Carers UK Advice over the telephone. If you would prefer to speak to someone face to face, then you should try contacting your local citizen s advice bureau or a welfare rights project. 0808 808 7777 www.carersuk.org Her Majesty s Revenue and Customs Tax Credit Helpline 0345 300 3900 Textphone: 0345 300 3909 www.hmrc.gov.uk/taxcredits The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 19

Support Contact a Family From cake sales, to running marathons, or signing up to be a regular giver there are many ways you can help us continue to provide information, advice and support to ALL families with disabled children in the UK. Find out more: www.cafamily.org.uk/fundraising 020 7608 8786 fundraising@cafamily.org.uk Or why not get involved in our campaign work across the UK? www.cafamily.org.uk/influencing Get in contact with us 209 211 City Road, London EC1V 1JN 020 7608 8700 info@cafamily.org.uk www.cafamily.org.uk www.facebook.com/contactafamily www.twitter.com/contactafamily www.youtube.com/cafamily Free helpline for parents and families Access to over 200 languages 0808 808 3555 Open Mon Fri, 9.30am 5pm helpline@cafamily.org.uk Free family linking service www.makingcontact.org Registered Charity Number: 284912 Charity registered in Scotland No. SC039169. Company limited by guarantee. Registered in England and Wales No. 1633333. VAT Registration No. GB 749 3846 82. Contact a Family is a registered trade mark. Although great care has been taken in the compilation and preparation of this guide to ensure accuracy, Contact a Family cannot take any responsibility for any errors or omissions. The photographs in this guide do not relate to any personal accounts. Written by Derek Sinclair Contact a Family, August 2015 Order code i30 The tax credits guide Freephone helpline 0808 808 3555 helpline@cafamily.org.uk 20