Contractors with young families may be aware that HMRC has overhauled the tax credit scheme.
Before the start of the new tax year, people could claim Child Tax Credit providing their income did not exceed £41,300. However, as from the 6th of April this year, the upper earnings limit is based on individual circumstances.
If your annual income exceeds about £26,000 and you only have one child, you are unlikely to qualify for Child Tax Credit. The same is true if you have two kids and an income in excess of about £32,200.
Claimants can also only get their payments back-dated for one month instead of the previous three.
HMRC has warned that claims for tax credit need to be renewed no later than the 31st of July, or payments will cease. In 2011, one in five claimants missed the deadline.
The Revenue is asking claimants to make doubly sure they provide accurate information and warns it may contact claimants’ employers to verify information if it harbours any doubts. As well as changing the income limits for Child Tax Credit, the Revenue has also increased the working hours rules for couples who have at least one child and want to claim Working Tax Credit.
Steve Lamey, the director of benefits and credits at HMRC, said people should act as soon as their renewal pack arrives. The sooner they return it to the Revenue, the sooner they will receive the correct amount of money.
A new scheme called Universal Credit is set to be introduced next year and the government intends to switch all tax credit claimants to the system by 2017.
© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Daily Shoot: Loose Change by bgreenlee
