End your tax credits

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1. Overview

Universal Credit will replace tax credits, Housing Benefit and some other benefits. You cannot claim Universal Credit and these other benefits at the same time.

Your tax credits award will end if:

  • you or your partner make a claim for Universal Credit (even if the claim is not approved)
  • you move in with a partner who has made a claim for Universal Credit

After your tax credits stop, you cannot claim tax credits again.

Once you’ve applied for Universal Credit, you’ll get a letter from HMRC (called your ‘award review�) to end your tax credit award. This is different to your normal tax credits renewal letter.

³Û´Ç³Ü’l±ô need to check and confirm your personal details and income. How you work out your income will depend if you’re:

Tax credit overpayments

Your award review letter may tell you that you need to pay back any tax credits overpayments when you end your tax credits.

You can also get a letter at a later date telling you that you need to repay an overpayment if:

  • you had to make an ‘award declarationâ€�, for example if you’re self-employed
  • you had to report any changes from your award review

³Û´Ç³Ü’l±ô be told when repayments start to come out of your Universal Credit.

2. Personal details

³Û´Ç³Ü’l±ô get a guide with your award review letter to help you end your tax credits award. Read it with your award review letter to confirm your personal details.

Your award review will ask you to confirm:

  • if you claim tax credits by yourself or with a partner
  • where you live
  • if you have a disability

³Û´Ç³Ü’l±ô also have to confirm:

  • any children (under 16 years old) that you’re responsible for
  • any children between 16 and 20 years old in full-time education or approved training (up to NVQ level 3)
  • if any children get benefits, for example Disability Living Allowance or Personal Independence Payment
  • any children that were certified blind within 28 weeks of your claim (or stopped being certified blind)
  • any childcare costs you have

³Û´Ç³Ü’l±ô also have to confirm your income from:

3. If you're employed or on benefits

³Û´Ç³Ü’l±ô have to confirm your income if you’re paid your wages or salary through PAYE or if you get your income from benefits.

You only have to confirm your income for your ‘award period� - this is usually from 6 April (in the current tax year) to the time you stop claiming tax credits.

³Û´Ç³Ü’l±ô need to check that:

  • your income for your award period is correct
  • any changes made to your tax credits are correct

This is different from your tax credits renewal letter. ³Û´Ç³Ü’l±ô get a guide with your award review to help you confirm your income. Read it with your award review letter.

Your income

³Û´Ç³Ü’l±ô have to confirm your total income. This includes:

  • income from employment, including if you could not work but were still getting paid (‘on furloughâ€�)
  • income from your pensions, including the State Pension
  • income from self-employment
  • any other income (including any rental or savings income)
  • some taxable benefits

Deductions

You can deduct any of the following you made during your award period:

  • payments to a registered personal pension scheme or annuity
  • donations to charity where Gift Aid was applied

Once you’ve worked out your income you need to check the amount against your award review letter.

4. If you’re self-employed

You need to work out your income from being self-employed for your ‘award period� - this is usually from 6 April (in the current tax year) to the time you stop getting tax credits.

This is different from your tax credits renewal letter. ³Û´Ç³Ü’l±ô get a guide with your award review to help you work out your income. Read it with your award review letter.

You also need to include details of earnings from any other employment and other income in your ‘award declaration� (the information you send to HMRC to confirm your income), for example pensions or taxable benefits.

»Ê¹ÚÌåÓýapp tax year runs from 6 April to 5 April the following year.

Working out your income

You may be able to use a part-year profit calculator to work out your income for your award period.

You can also use HMRC’s working sheet to work out your daily rate and multiply it by the number of days in your tax credits award period.

You need to know:

  • the dates for the accounting period which ends in the tax year you start claiming Universal Credit - this is usually 6 April to 5 April the following year if you’re self-employed
  • your actual or estimated profit for the accounting period - HMRC may ask how you worked out your estimated profits
  • the number of days in your accounting period - this is usually 365, but it may be different if you’ve recently started or stopped being self-employed, you changed your accounting dates or it’s a leap year

If you do not have a full year’s accounts

You may be able to use a part-year profit calculator to work out your income for your award period.

You can also use HMRC’s working sheet to work out your daily rate and multiply it by the number of days in your tax credits award period.

Example

You claim Universal Credit on 1 December 2015. You need to work out your taxable profit for the period 6 April 2015 to 30 November 2015 (your ‘award period�).

Your accounting period runs from 6 April 2015 to 5 April 2016 (the same as the tax year) which is 366 days.

You work out your estimated taxable profit for your accounting period to be £22,000.

Your daily rate is £60.10 (£22,000 divided by 366 days).

»Ê¹ÚÌåÓýapp number of days in your award period is 239 days.

Your taxable profit for your award period is £14,363 (239 days multiplied by £60.10).

If you have more than one business, you need to work out the taxable profit this way for each one. Put the total in your ‘award declaration�.

Other income

You need to include details of other income you’ve received while you were getting tax credits in this tax year, including:

Take the total amount before tax and deduct £300. If this leaves you with a minus figure, enter �0�.

Do not include:

  • maintenance payments
  • student grants or loans

Deductions

You can deduct any of the following you made during your award period:

  • payments to a registered personal pension scheme or annuity
  • donations to charity where Gift Aid was applied

If you made a loss, or expect to make one, you can:

  • enter â€�0â€� as your self-employed income in your ‘award declarationâ€�
  • deduct it from any other income you (or your partner) have

Once you’ve worked out your income you need to report your income to HMRC on your ‘award declaration�.

5. Changes to your personal details or income

³Û´Ç³Ü’l±ô have to confirm any changes when you stop getting tax credits - if you have not already reported them.

³Û´Ç³Ü’l±ô have to pay back any tax credits overpayments if HMRC finds out that the information on the award review was incorrect or incomplete.

6. What happens next

If your details are incorrect you’ll have to phone HM Revenue and Customs (HMRC) within 30 days. HMRC will correct your details and tell you what happens next.

If you need to report your self-employed income, you’ll need to send your ‘award declaration� to HMRC.

You will not have to do anything else if the details on your award review are correct or you if do not have to report any employed or self-employed income.

»Ê¹ÚÌåÓýappre can be a gap between when you stop getting tax credits and when your Universal Credits payments start.

You may be able to get an advance on your first Universal Credit payment if:

  • you’ve recently been receiving another benefit
  • you’re in urgent financial need

Check with your work coach if this applies to you.

If you’re getting income from self-employment

You need to report your earnings every month when you get Universal Credit. ³Û´Ç³Ü’l±ô be sent a ‘statement of earningsâ€� form to do this.

If you’re claiming any other benefits

Universal Credit will replace:

  • income-based Jobseeker’s Allowance
  • Housing Benefit
  • income-related Employment and Support Allowance
  • Income Support

Once you’ve claimed Universal Credit, these benefits will stop and you’ll start getting Universal Credit instead.

³Û´Ç³Ü’l±ô continue to get any other benefits.