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Child Tax Credit

Child Tax Credit is a benefit that helps with the costs of raising a child if you’re on a low income. It’s being replaced by Universal Credit, so most people who need help with these costs now have to make a claim for Universal Credit instead.

Universal Credit and Child Tax Credit

Child Tax Credit is one of six benefits being replaced by Universal Credit.

Unless you’re currently getting Working Tax Credit, you can no longer make a new claim for Child Tax Credit and must apply for the child element of Universal Credit instead.

On Universal Credit, you might be able to claim back up to 85% of eligible childcare costs. In 2021/22 this is up to a maximum of £646.35 for one child, or £1,108.04 for two or more children.

This is compared with the 70% you could claim for childcare costs on Child Tax Credit.

To get the childcare costs element, you must:

  • be in paid work, or
  • have an offer of paid work that’s due to start before the end of your next Universal Credit monthly assessment period.

If you’re in a couple, your partner must also be in paid work. This is unless they can’t provide childcare because of a limited capability for work, or they’re caring for a severely disabled person.

You can claim the child element of Universal Credit for all qualifying children born before 6 April 2017.

If your children were born on or after 6 April 2017, you’ll only be able to claim for the first two. This is unless you had a multiple birth – or there are other limited exceptions.

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If you’re already claiming Child Tax Credit

You’ll have to move to Universal Credit at some point.

How and when you move depends on whether you have to make a new claim because of a change in circumstances, or are asked to claim Universal Credit by the Department for Work and Pensions (DWP).

If nothing changes in your life that means you have to claim Universal Credit, DWP will contact you when it's time to move so there is no need for you to do anything until then.

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If you have a change in circumstances

You must tell HMRC within 30 days if you have a change of circumstances that could affect your Child Tax Credit.  For example:

  • losing or getting a job
  • having a baby
  • a partner moving in or out.

This might mean you’ll have to make a new claim for Universal Credit. HMRC will tell you what you need to do.

Call the Tax Credit Helpline on 0345 300 3900 to let them know about any changes to your circumstances.

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Keeping your tax credits up to date

You need to renew your tax credits claim by 31 July every year if you want to keep getting them.

HMRC will write to you telling you what you need to do to renew your tax credits.

You should get your pack in May or June. The deadline to respond is usually 31 July each year.

If you don’t get your renewal pack, you’ll need to contact the Tax Credit helpline on 0345 300 3900. Do this as soon as you can to make sure you can meet the deadline.

If you miss the deadline

  • You’ll be sent a ‘statement of account’, telling you your tax credits will stop. Any provisional payments you get will be classed as an overpayment and will need to be repaid.
  • Contact HMRC within 30 days of the date on your statement of account. A renewal can then be processed to reinstate your claim back to 6 April.
  • If you contact HMRC later than 30 days after you get your statement of account, you’ll only be able to have tax credits reinstated where you can show you have ‘good cause’ for renewing late. You’ll need to contact them by 31 January. Your claim will then be treated as if it was made on 6 April.
  • If your claim isn’t reinstated, or you don’t contact HMRC after getting your statement of account, your tax credits payments will stop. And you’ll have to pay back the tax credits you’ve received since 6 April 2020.

If HMRC stops your payments

You might be able to apply for Universal Credit if you‘re under State Pension age (or your partner is). Or you might be able to apply for Pension Credit instead if you (and your partner) are over State Pension age.

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Renewing your claim for tax credits

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When you renew your claim, make sure you use the official HMRC phone number, website and correspondence. This is because around the deadline time there is often an increase in scammers who often target people likely to be reapplying.

You can manage and renew your tax credits at GOV.UK (Opens in a new window)

There’s also online help available to support you. This includes webchat to help try and answer queries around renewing.

Or call HMRC on 0345 300 3900. But be aware that this line can get very busy in the days leading up to the deadline, so give yourself plenty of time.

There’s also a dedicated team to support the most vulnerable customers who can’t go online. People HMRC know need this support will be contacted by the support team.

Always let HMRC know if your circumstances change at any time during the year. For example, if your income changes, your child leaves home or you move house.

This is because you might have to claim Universal Credit instead.

Tax Credits and income changes

If your income goes up by £2,500 or more and you delay telling HMRC or wait until the next time your claim is due to be re-assessed, you might find you’ve been overpaid tax credits.

You’ll be asked to pay this extra money back. This will be either by reducing your future tax credits, or by direct payments if your tax credits have stopped.

To avoid this bill, it’s even more important to tell HMRC within 30 days of when you get the extra money.

It’ll be easier for your tax credits to be adjusted, and decrease the chance you’ll be chased for over-payments later.

It also works the other way. If your income falls by £2,500 or more, you might be entitled to more tax credits.

If you’re asked to repay tax credits and will struggle to pay, speak to HMRC as soon as you can.

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