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HMRC has introduced a number of changes which will take effect from 6 April this year. We are focusing on two changes which we think will affect a significant number of claimants, and where HMRC's guidance has arguably fallen short.

Change to Working Hours Rule for Working Tax Credits

HMRC has publicised that most couples with children will need to work at least 24 hours a week (up from 16 hours a week) between them from 6 April 2012. One person in the couple will still need to work at least 16 hours a week (so for instance two people working 12 hours a week each would not qualify).

However, there are a number of exceptions to this change and some couples will not have to achieve the new target of 24 hours a week:

• Where people are aged 60 or over, or
• Qualify for the disability element of the Working Tax Credit, or where the other person in the couple is:
• "Incapacitated" - basically, in receipt of certain benefits due to ill health
• An in-patient in hospital
• In prison, or
• Entitled to Carer's Allowance

Unfortunately, in most cases HMRC doesn't know when people are entitled to the lower threshold so there is a risk that HMRC will incorrectly cut some couples' Working Tax Credits from 6 April this year. Where couples believe that they should be eligible to claim Working Tax Credit even though they don't achieve the normal new minimum threshold of 24 hours a week then they must tell HMRC by 6 April 2012 so that their entitlement isn't wrongly withheld. This last point is what HMRC has failed to publicise - apparently, rather than try to make people aware that they should get in touch to preserve their entitlements, they are relying on claimants to contact them when their credits are cut!

Which ironically brings us to the second significant change to the Tax Credits system from 6 April...

Time Allowed for Reporting Changes Falls from 3 Months to Just 1 Month

To be fair to HMRC this has been better publicised: whereas in the past claimants had up to 3 months either to make a claim, or to report a change affecting an existing claim, this has been cut to just 1 month: effectively any benefit can now be backdated by only 1 month.

But whilst HMRC has made more effort to make people aware of this change, it does seem most unfortunate that there may potentially be many claimants whose credits will incorrectly be cut by HMRC and may suffer further inequity, because any correcting adjustment may only be backdated by a month.

For further information on Tax Credits changes, please see the Low Incomes Tax Reform Group website.