A

Annual Income: Total earnings in a tax year before deductions.

Application Deadline: Final date for submitting claims or renewals.

Adjustments: Changes HMRC makes to your tax credit payments based on updates or overpayments.

Allowance: Specific amounts of income or expense considered when calculating eligibility.

Appeals Process: Steps to contest a decision made by HMRC about your tax credits.

B

Basic Amount: The standard rate of Working Tax Credit before adjustments.

Backdated Payments: Payments made to cover the period before a claim was processed, usually up to 3 months.

Benefits Cap: The maximum total benefits a household can receive, including tax credits.

Breakdown Notice: A detailed statement showing how your payments are calculated.

Budgeting Support: Guidance to manage overpayment repayments.

C

Child Tax Credit: Financial support for families with children under 16 or under 20 in full-time education. Learn more here.

Childcare Costs: Expenses eligible for additional tax credit support when using registered childcare providers.

Claim Form: Document used to apply for tax credits, either online or by post.

Compliance Check: HMRC’s review process to ensure claims are accurate and genuine.

Couple’s Claim: A tax credit application submitted jointly by two partners living together.

D

Disability Element: Extra support within Working Tax Credit for those with qualifying disabilities.

Dependent: Someone reliant on your income, such as a child, qualifying you for additional tax credits.

Deduction Rate: The percentage at which your tax credits reduce as your income increases.

Data Matching: HMRC’s process of verifying your details against other government databases.

Decision Notice: An official document outlining HMRC’s decision on your claim.

E

Earnings: All taxable income, including salaries, bonuses, and freelance earnings.

Eligibility Threshold: The income limit below which tax credits are available.

Entitlement Check: A review to determine how much tax credit you qualify for.

Excess Payment: An overpayment that HMRC will recover from future payments.

F

Full-Time Work: Working 30 hours or more per week as defined for tax credits.

Family Element: An additional tax credit for families with children, included in Child Tax Credit.

Fraud Investigation: An HMRC inquiry into suspected false claims or incorrect information.

Final Notice: Notification from HMRC about changes in your entitlement.

G

Gross Income: Income before any taxes or deductions.

Guaranteed Payments: Tax credit amounts HMRC guarantees to pay if eligibility criteria are met.

Guidance Notes: HMRC-provided instructions for completing tax credit applications.

Gap in Entitlement: A period where tax credits are temporarily stopped.

H

HMRC: Her Majesty’s Revenue and Customs, responsible for tax credit administration. Visit their official website.

Household Income: Combined income of all adults in a household, used to determine eligibility.

Hourly Threshold: The minimum number of hours required to qualify for Working Tax Credit.

Housing Benefit: Financial support for housing costs, often considered alongside tax credits.

I

Income Change: A change in earnings that must be reported to HMRC.

Initial Claim: The first application submitted for tax credits.

Income Limit: The maximum earnings allowed to qualify for certain tax credits.

Investment Income: Earnings from savings or investments considered in eligibility calculations.

J

Joint Claim: A tax credit application made by couples living together, combining both incomes.

Job Change: Any change in employment that must be reported to HMRC to avoid overpayment.

Judicial Review: Legal process to challenge HMRC’s decisions on tax credit claims.

K

Key Worker: A professional in a critical sector; while not directly tied to tax credits, this status may influence other benefits.

Kinship Carer: A relative or family friend caring for a child, potentially eligible for additional tax credits.

L

Late Renewal: A delayed submission of tax credit renewal forms, which could lead to a temporary suspension of payments.

Lifetime Limit: The total amount of tax credits that can be claimed under certain conditions.

Low Income: A classification for individuals earning below the threshold for certain benefits, including tax credits.

M

Mandatory Reconsideration: The process of requesting HMRC to review their decision on a tax credit claim.

Means-Tested Benefits: Financial support determined by household income and savings, including tax credits.

Minimum Hours: The minimum weekly working hours required to qualify for Working Tax Credit.

N

National Insurance Contributions: Payments made to HMRC, considered when calculating eligibility for certain benefits.

Notification of Change: Requirement to inform HMRC of changes in income, employment, or family circumstances.

O

Overpayment: Tax credits paid in excess of entitlement, which must be repaid to HMRC.

Outstanding Balance: The amount owed to or by HMRC due to discrepancies in tax credit payments.

P

Partial Entitlement: Reduced tax credit payments based on income exceeding the threshold.

Personal Circumstances: Factors like childcare, marital status, or disability that impact eligibility.

Provisionally Paid: Interim tax credit payments while HMRC processes your claim.

Q

Qualifying Child: A dependent under 16 or under 20 in full-time education, eligible for Child Tax Credit.

Qualifying Disability: A condition that meets HMRC’s criteria for additional tax credit support.

R

Renewal Pack: Documentation sent by HMRC to confirm or update tax credit details annually.

Repayment Plan: Agreement to repay HMRC for overpayments over time.

Reduction Rate: The rate at which tax credits decrease as income increases.

S

Self-Employed Income: Earnings from self-employment considered for tax credit calculations.

Single Claim: Tax credit application submitted by individuals without a partner.

Statement of Account: A summary of payments and adjustments issued by HMRC.

T

Tax Credit Renewal: The annual process of confirming your tax credit details with HMRC.

Threshold Income: The income level above which tax credits begin to reduce.

Tax-Free Childcare: An alternative to childcare support within tax credits.

U

Universal Credit: The replacement benefit for tax credits, combining multiple benefits into one payment.

Underpayment: When HMRC pays less than the claimant is entitled to, requiring correction.

V

Voluntary Work: Unpaid work that does not count toward the minimum hours for tax credits.

Variable Income: Fluctuating earnings that affect tax credit calculations.

W

Working Tax Credit: A tax credit for individuals working a set number of hours and earning below a certain income threshold.

Withdrawal Rate: The percentage rate at which tax credits reduce as income rises.

Written Appeal: Formal request to HMRC to reconsider a decision about tax credits.

X

X-Dates: Specific dates HMRC uses for reviewing and renewing claims.

Y

Yearly Adjustment: HMRC’s recalculation of tax credits based on income changes during the year.

Z

Zero Award: A notification that income exceeds the threshold, resulting in no tax credit payment.