Tax credits and a few other social security payments are gradually being replaced with Universal Credit (UC). The UK now offers universal credit, and HMRC has said that it is no longer feasible for someone to file a new tax credit claim. People are required to, instead, apply for UC or, if applicable, pension credit. Those who have already filed a tax credit claim may proceed to renew it and/or include more information in it. For further details, visit our tax credit page. Most current tax credit claimants, as far as we can tell, will switch to either pension or universal credit. By the end of 2024, most people who are still receiving tax credits and are not yet of state pension age should get an invitation to transfer to UC. This guide will cover everything you need to know about tax credits.

First, let us discuss the definition of tax credits. Then, we can move on to claiming them and contacting HMRC.

What are Tax Credits?

The UK Government makes additional payments to parents, people with disabilities, and people with low incomes. These are called tax credits. This helps low-income households as it adds to their income, and they can deal with their day-to-day expenses more easily. For those who are living on the National Minimum Wage, tax credits are substantially beneficial.

On an annual basis, you need to renew your tax credits. HMRC can issue the credit unless your circumstances change.

Two types of tax credits exist: one is a working tax credit, and the other is a child tax credit. Your household circumstances determine which one you can claim. Perhaps you can claim both.

People who work and earn a low income are eligible for a working tax credit (WTC). You can claim it whether you are self-employed or an employee. Even if you do not have children, you can get WTC. Thus, you must check if you can qualify.

For those people who have children, a child tax credit (CTC) is available. You can get this aside from child benefit. Moreover, you do not need to have a job to get it.

Qualifying criteria for child tax credit and working tax credit differ. However, you can use just one claim.

Are Tax Benefits and Tax Credits the Same?

Although tax credits are usually considered as a benefit, they are not like other social security benefits. This is because they are paid in weekly or monthly instalments during the tax year after being calculated as an annual amount. This starts on April 6 in one year and ends on April 5 in the next year. Furthermore, HMRC deals with tax credits. Whereas the Department for Work and Pensions (DWP) deals with almost every other benefit. Moreover, this includes Universal Credit.

How Much Tax Credit Can You Get?

Several factors determine the amount of tax credits you can receive. This includes you and your partner’s total taxable income. For tax credits, income from both the previous year and the current year is likely relevant. Factors such as how many hours you work and how much childcare you pay also determine it. Also, if you or your family member (partner or child) has a disability or long-term illness.

What are the Working Tax Credit Rates for 2024?

The following table shows the working tax credit rates for the 2024/25 tax year:

Rates (£ per year)	2024 to 2025 (proposed)
Basic element	£2,435
Couple and lone parent element	£2,500
30-hour element	£1,015
Disabled worker element	£3,935
Severe disability element	£1,705

What are the Child Tax Credit Rates for 2024?

The following table shows the child tax credit rates for the 2024/25 tax year:

Rates (£ per year)	2024 to 2025 (proposed)
Child Tax Credit family element	£545
Child element	£3,455
Disability element: disabled child rate	£4,170
Disability element: severely disabled child rate	£1,680

What is Universal Credit?

The UK government supports people who require additional money by giving them a benefit payment called Universal Credit. Anyone who has a low income can claim it, whether they are working part-time, full-time, or are unemployed. Therefore, they are greatly beneficial for anyone who is struggling.

To replace benefits and credits, the government introduced Universal Credit. This includes replacing the child tax credit and the working tax credit as well. Universal Credit is replacing plenty of benefits, including:

• Income Support.
• Working Tax Credit.
• Housing Benefit.
• Income-based Jobseeker’s Allowance (JSA).
• Income-related Employment and Support Allowance (ESA).

If you were already claiming these benefits, then the DWP may have notified you. This notification will let you know what is going to happen next.

In case you did not hear from the DWP, then you do not need to do anything. However, that is not the case if there is any change in your circumstance that the DWP must know about.

There is only one benefit that Universal Credit is not replacing. This is the Severe Disability Premium. For those who already get this benefit, it is not possible to get Universal Credit.

How to Claim Tax Credits

To find out if you are eligible for tax credit, you can check online. The only way you can make a new claim for tax credits is if you claim the Severe Disability Premium presently. Also, you can do so if, in the past month, you began to receive it and still qualify for it. Certainly, you can benefit from these tax credits.

You can apply for a pension credit or universal credit if you cannot make a new claim for a child tax credit or working tax credit. Undoubtedly, it is important to understand how to make claims.

How Can You Claim Work Tax Credits?

Different factors determine your eligibility for universal credit or working tax credit. For example, the number of hours you work weekly and your age.

You must meet the following criteria:

• Between 25 and 59 years old, working more than thirty hours a week.
• Over 60 and working over 16 hours a week.
• Being disabled and working over 16 hours a week.
• An unmarried parent who works over sixteen hours a week and has one or more kids.
• A couple with one or more children that works over twenty-four hours a day (with one partner putting in at least sixteen hours).

Also, you can apply for a working tax credit while you are on leave. Hence, it is essential to know if you are eligible.

How Can You Claim Child Tax Credits?

Universal credit has also replaced the child tax credit, just like it did with the working tax credit. This is true for many households.

Nevertheless, you can continue to get a child tax credit if you meet the criteria, such as

• Either you are already claiming a working tax credit or a child tax credit.

Or

• You are getting the severe disability premium benefit currently.

Until the age of 16, you can claim for a child. If they are in approved education, then you can claim until they are 20.

“Approved education” encompasses homeschooling (up to the age of 16), A-level or similar courses, traineeships, occupational qualifications, and NVQs up to level 3. You could also think about other volunteer training. Therefore, you must make sure you are eligible for child tax credits.

How Do I Contact HMRC About Tax Credits?

If you have any questions regarding tax credits, you can reach out to HMRC in the following ways:

Through Online Service

To transact with HMRC digitally, you can use their online service called the Personal Tax Account. If you need to deal with your tax credits, you can use the online service called ‘Manage your Tax Credits’. You can access it directly or through your personal tax account. To do so, you must follow the links to the tax credit part. Here, you can find out the amount of your next payment and report any changes in your circumstances. Furthermore, you will know the due date of payment and complete the renewal. After completing your renewal declaration, you can check its progress.

Additionally, you can use it for:

• Replying to a check.
• Challenging an overpayment.
• Requesting a Mandatory Reconsideration.
• Notifying HMRC of their financial difficulties stemming from the recovery of an overpayment from their ongoing entitlement to Tax Credits.

If HMRC asks you to send in items of evidence or paperwork, then you may need to reply online. Then, using the online service, you may have to attach three photographs as evidence. Thus, you should know how to use this online service.

You must register with the Government Gateway service to use this online service for tax credits. When setting up a Government Gateway account, you must keep your phone with you as you will receive a 6-digit code. This is sent automatically when you log in. For more information, visit the government website.

Via HMRC App

You also have the option to use the HMRC App through your smartphone. This app is free to download from the ‘app store’. It offers you various digital services across the lines of business of HMRC. By using this app, you can find out the amount and due date of your next payment. Furthermore, you can inform HMRC about any changes in your circumstances. Completion of your tax credit renewals is also possible through this app.

To access the HMRC App, you can use fingerprint identification. This feature is available on specific devices. Certainly, this app makes it easier to deal with your tax credit claims.

By Phone

The tax credit helpline’s main number is 0345 300 3900 (for those who are hard of hearing or cannot speak over the phone, they can use the NGT text relay by dialling 18001 and then 0345 300 3900). Callers from overseas can reach +44 2890 538 192. This helpline is open Monday through Friday from 8 a.m. to 6 p.m. (closed on weekends and holidays).

The ideal times to call, according to HMRC, are between 8.30 and 10.30 am and 2 and 4 pm, on Tuesdays through Thursdays, as the phone line is quite busy.

HMRC routes callers to the hotline (also known as ITA) via an automatic response system. In addition to providing basic general messages that may help answer some questions, this is intended to help direct callers to pertinent information on the GOV.UK website and route the call to an adviser who can assist with the call query. Please take note that the email alternatives to notify changes of name or address are not currently relevant for tax credits. The system is based on speech recognition, and LITRG has created a handy guide to offer some helpful ideas and tips on utilizing this system.

Voice ID enrolment is a possibility for those who contact the hotline. To take advantage of the service, the claimant must utter a sentence five times. After that, their voice will be used to verify them the next time they phone. Regarding their usage of voice recognition, HMRC has released a privacy notice.

You can use this number to:

• Get general advice.
• Inquire about a claim.
• Make a claim.
• Ask about your payments.
• Inform HMRC about any changes in your circumstances.
• Get a renewal of a claim.
• Find out the reason for the overpayment of a claim.
• File a complaint.

By Post

If you want to contact HMRC by post, here are some useful tips to do so:

• Make sure you use the correct postcode, such as BX9 1AS, and write the entire postcode on the envelope.
• Do not send supporting documentation until requested or required.
• Only refer to something as a “complaint” if it is a true one.
• Make sure all identifiers, such as the National Insurance number or tax credit reference, are visible and easy to find on the first page.
• Verify that all print and mail forms are accurate and complete.
• Unless it contributes something, do not include a cover letter.

Therefore, you should know all the ways to contact HMRC.

What Classifies as a Change in Your Circumstances to Tax Credits?

It is crucial to inform HMRC immediately if there are any changes in your circumstances. You must do so in one month as that is the deadline. Failure to notify HMRC on time can result in a fine of up to £3,000.

Now, what does change in your circumstances include? Well, it includes the following:

• Change in your working hours.
• Divorce or the end of a civil partnership.
• If your partner passes away.
• Your child gets taken into custody.
• The passing away of your child.
• Approved education or training for your child stops.
• Your child leaving your home.
• Drop in childcare costs by £10 or more. Or you receive other financial aid with childcare.
• Childcare stops completely.

Hence, you should notify HMRC regarding any of these changes in your circumstances as soon as you can.

Conclusion

To summarise, if someone requires monetary aid, they can avail it through tax credits. The UK government makes extra payments to those with low income or disability. You have the option to claim working tax credits or child tax credits. However, universal credit is replacing these tax credits. Fortunately, there are plenty of advantages to each of them. Nevertheless, you must check if you are eligible to claim these credits. Yet, they are not the same as tax benefits as HMRC is the one who issues them and not the Department for Work and Pensions (DWP).

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