DWP sends urgent £3,000 warning to everyone claiming tax credits

Thousands on benefits have been hit with a stark warning: update HM Revenue and Customs about any life changes or risk losing cash or facing fines. A whopping 730,000 letters have been dispatched, urging claimants to report shifts in circumstances, be it a new job, partner, or kids flying the nest.

The clock's ticking with a July 31 deadline looming. Miss it and you could see your tax credits slashed.

With the tax credit system on its way out, replaced by Universal Credit next year, it's crucial for those still receiving the old benefit to stay vigilant.

Tax whizz Andy Wood from Tax Natives cautions: "If you are a tax credit claimant, you should inform HMRC of any changes in your circumstances, such as changes in living arrangements, childcare situations, or employment status."

He warns of dire financial fallout for those who don't keep HMRC in the loop: "Failure to do so could result in major financial consequences, such as loss of tax credits or fines of up to £300. Non-compliance with reporting requirements can have serious repercussions such as loss of tax credits, repayment demands, and even fines of up to £3000 if incorrect information is provided.", reports the Mirror.

HMRC has issued a stern warning about the consequences of failing to report changes to tax credits in a timely fashion, stating: "If you receive tax credits you're not entitled to, you'll need to repay the money. You may also have to pay a penalty."

Further outlining the urgency of updating any alterations within 1 month, HMRC asserted: "You must report these changes within 1 month. If you report changes as soon as they happen, you're less likely to be paid the wrong amount."

Moreover, notable fines can ensue for those who do not inform promptly: "You could be fined up to £300 if you do not report certain changes within 1 month, and up to £3,000 if you give wrong information. If you estimated your income when you renewed your tax credits - for example because you're self-employed - tell HMRC your actual income by 31 January."

Claimants are encouraged to communicate with HMRC regarding any changes as soon as possible.

You must tell HMRC immediately if your:

• Living circumstances change, for example you start or stop a relationship, move in with a new partner, get married or form a civil partnership, permanently separate or divorce
• Child or partner dies (you do not need to tell HMRC if you’ve already used the Tell Us Once service )
• Child stops going to childcare for four weeks or more when they would normally go
• Childcare costs stop, go down by £10 or more a week, or you start getting help with them
• Child leaves home, for example moves out or goes into care
• Child is taken into custody
• Child over 16 leaves approved education or training, or a careers service
• Childcare provider is no longer registered or approved
• Working hours fall below 30 hours a week (combined if you’re in a couple with children)
• Working hours fall below or go above the minimum required to qualify

You must tell HMRC right away if you:

• go abroad for 8 weeks or more
• leave the UK permanently or lose the right to reside in the UK
• start working for less than 16 hours while claiming childcare costs - except in certain situations
• have been on strike for more than 10 consecutive days
• have any change in income (report this immediately if it goes up or down by £2,500 or more)
• increase your working hours to 30 hours or more a week (combined if you’re in a couple with children)
• have a baby or take responsibility for another child
• start or stop claiming benefits for yourself or a family member, or those benefits change
• start or stop having a disability that puts you at a disadvantage in getting a job
• get certification that your child is blind or their certification ends
• start paying for registered or approved childcare
• stop getting help with childcare costs

According to the HMRC, such changes should be reported within a month to ensure claimants receive what they're entitled to: "You should report these changes within 1 month to make sure you get everything you're entitled to. Payments cannot usually be backdated any further than this."

People expecting benefits should have received a renewals pack by June 15. Failing that, they should get in touch with HMRC to identify wrinkles that could lead to potential delays.

HMRC has urged Brits to check their renewal packs for a specific code to see if they are eligible for automatic renewal. Andy Wood, Managing Director of Tax Credit at HMRC, said: "If you're eligible for automatic renewal, check for the specified code 'TC 603 R' and accompanying letter in the renewal pack. This streamlines the process and minimises the burden, ensuring continued receipt of tax credits without unnecessary delays. Your tax credits will be automatically renewed if your renewal form has the code 'TC 603 R'."

Mr Wood added: "You are required to review your renewal pack and report any changes to HMRC by the end of July. These changes include living arrangements, childcare situations, and employment status. For instance, if childcare costs decrease by £10 or more per week, or working hours fall below 30 hours per week (combined for couples with children), report it to maintain the accuracy of the tax credit claim."