Important changes are coming to the Tax Credits system which may have a material effect on clients.
From 6 April 2012
- Claims can only be back-dated by one month (instead of three).
- The upper income limit for the family element is removed, this means that the family element will be reduced in the same way as the other elements.
- A fall of up to £2,500 of income year on year is disregarded.
There are changes to the working hours requirements
- Couples with children will need to work 24 hours a week between them, instead of 16 hours.
- Over 50s will see the end of the 50+ element, so most will now how to work
HMRC have been notifying many Tax Credits claimants that their claim for tax credits will end from April 2012 unless they notify HMRC.
Claimants should think about contacting HMRC to ensure that they remain within the tax credits system so that they have time to work out their income for the 2011/12 tax year without risking losing benefits. The changes to the backdating rule means that there is a potential to lose out if you leave the system and then have to go back in.
Further reading
HMRC Tax credits: effect of Budget changes from 6 April 2012