A tax credit is a term defined for an extra monthly payment made by the government to its citizens in order to help them fulfill their expenditures. There are different types of tax credits available that vary with countries due to different laws and regulations. These credits available for a year and you need to renew tax credits every year to ensure a continuous and correct amount entitled according to your financial and household conditions.
Importance of renewing tax credits
If you are granted a tax credit, the office of the tax credits will approach you for a renewal of your tax credits every year. Annual renewal is important for the officers to ensure a continued and correct payment of credits to you. There are various points that support the importance of renewal of tax credits that are mentioned below.
- The renewal is necessary for the tax office to make sure that they have the latest up to date information about your financial status to decide on future payments.
- The tax office provides a renewal form to all those availing tax credits to know about any changes that will be affecting the amount of tax credits that you have been entitled to for the last year.
- Renewal is necessary to ensure that you are going to get the amount of tax credits that you deserve.
- Another point of importance is that tax office wants to check whether you were paid the correct amount during the last year or not.
A tax year begins on the 6th of April of a year and is valid up to the 5th of April of the following year. In case of non renewal of tax credit, payments made to you by the relevant office will cease and you will have to face other issues also.
What if you missed the deadline?
Tax credits are paid to you from Revenue & Customs of Her Majesty (HMRC) and in case of non-renewal of these credits by you, payments made to you will cease. Other than the end of credit payments to you, the payments that are made to you for the next year before the deadline might also be recovered by the HMRC.
In case, you don’t have an accurate figure for your annual income, you might provide an estimated amount before the deadline in the renewal form. With this, you get an extended deadline for providing the actual figures by the end of January next year. If you miss this second deadline, you will be entitled to credit payment, according to the estimated income that you provided to the tax credit office before the main deadline. A statement of Account will be sent to you that will give you another 30 days to get your renewal.
If you fail to renew tax credits within the grace 30-day period, the tax office begins the process to recover all the credits made to you during the year starting from April. In this case, you would have to file a fresh claim that can be dated 3 months back only, while claiming ‘good cause’ can be helpful, if accepted, in extended the main deadline up to 31 January.