You need to renew if you receive an Annual Declaration form (TC603D or TC603D2) with an Annual Review notice (TC603R).
You don’t need to renew if you only receive an Annual Review notice (TC603R), as your claim will be renewed automatically. However you still need to tell the Tax Credit Office straightaway if:
- you have had any changes in circumstances
- your income is different to what’s shown in the Annual Review notice
- there are mistakes or details missing from the notice
If you’ve been sent an Annual Declaration (TC603D or TC603D2) and don’t renew, the following will happen:
- your payments will stop
- you will have to pay back any overpayment from the previous tax year
- you will also have to pay back any payments you’ve received from the start of the new tax year
- you’ll get a statement from the Tax Credit Office about your tax credits payments
- you will usually have to make a new tax credits claim if you don’t provide the information within 30 days
The HMRC calculator will help you understand whether you are entitled to tax credits and how much you could claim http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx
I know that many small business owners claim tax credits because in the early years of the business their income is low.
So don’t forget to renew by 31st July.
There are two types of Tax Credit and there is also Child Benefit:
Child Tax Credits
You could get Child Tax Credit for each child you’re responsible for if they’re:
- under 16
- under 20 and in approved education or training
You don’t need to be working to claim Child Tax Credit.
Child Benefit Changes
The current rate of child benefit is £20.30 a week for the oldest child and £13.40 a week for each subsequent child. The payments are made every four weeks into one parent’s bank account.
From Monday 7 January 2013, any household in which someone earns more than £50,000 will no longer be entitled to the full payment. Households which include someone earning more than £60,000 will not be entitled to any child benefit at all.
However, rather than just paying parents less the government will continue to pay the full amount and claw back overpayments through the tax system and a new High Income Child Benefit Charge – unless you opt not to receive the payments.
Working Tax Credits
Working tax credits are less easy to understand and often overlooked. They are awarded on a points system.
A working family with 2 Children could earn up to £58k and still get Working Family Tax Credits, on £30k they would get £12k in tax credits, at £40k its £8k and £50k its £4k (according to Tax Cafe – Small Business Tax Saving Tactics).
Claims are initially based on your previous years income and can only be backed a month.
Follow this link to find out how much you could be entitled to https://www.gov.uk/working-tax-credit/overview
The benefits system will be changing again with the introduction of Universal Credits in October 2013.