HMRC has confirmed that some tax credit claimants are receiving finalised award notices due to an error in their system, but no action is needed if details are correct.
Tax credit claimants receive unexpected letters
A person who received an unexpected letter from HMRC in August asked the tax authority for help. The letter related to a tax credit claim from 2006-07, and the recipient was confused about why they had been contacted.
HMRC initially asked if the letter indicated an overpayment, but the person replied: "I'm just wondering why you are sending letters relating to claims from 20 years ago. It's not showing an underpayment or overpayment."
HMRC's response
HMRC then explained that during the ongoing process of closing tax credits, it was discovered that some awards had an incorrect finalised status and an award notice was not issued when it should have been. The group said: "We are fixing the affected cases and this is generating the issue of finalised award notices. If all the information on the notice is correct, you don't need to take any action."
The recipient criticised the mail campaign as a "huge waste of money" but thanked HMRC for the explanation.
Official guidance
Official guidance on the Government website explains that tax credit claimants should have received a letter about the end of their claim. The group said: "You'll get a letter called your Annual Review when your tax credits award ends. This will say how much you’ve been paid up to 5 April 2025."
The guidance continues: "This is different to your normal tax credits renewal letter. You'll need to check that the information in the letter is correct (known as 'finalising' your tax credits)."
Taxpayers receiving these notices are advised to check all the details promptly. If there is a mistake, they should contact HMRC by the deadline written in the letter. The guidance warns: "If you do not contact HMRC before the deadline, they'll use the information they have to finalise your tax credits. You might be underpaid tax credits or overpaid tax credits."
