Exclusive advice for SMEs from HMRC

This Q&A was provided to SME magazine exclusively by HMRC

As a business owner you’re used to juggling the demands of being self-employed and looking after your family but are you aware of the financial support you’re entitled to receive? With the deadline for renewing tax credits, which provides 1.5 million working families with targeted financial support, fast approaching, SME Magazine asked the experts at HM Revenue and Customs (HMRC) to tell us more about the help available to working parents.

What financial support can a parent, who also runs their own business, get from HMRC?

HMRC is responsible for Child Benefit, Tax-Free Childcare and Tax Credits. Each could make a real difference to your household budget and support you and your family while you run your business.

Can you tell us more about each of the schemes?

  • Most people are aware of Child Benefit. Child Benefit is worth £24 per week for the oldest or only child and £15.90 per week for each additional child. It can be claimed by parents or guardians once you have registered your child’s birth and can be claimed up to age of 16 or 20 if the child stays in approved education or training. To check eligibility and find out more go to UK 
  • Tax-Free Childcare can help working families (including the self-employed) save up to £2,000 a year off their childcare bills for each child up to the age of 11, or up to £4,000 per year for a disabled child, up to the age of 16.

Open a Tax-Free Childcare account and for every £8 you pay in the government will top it up by £2. The savings can be used to pay for approved childcare and can make a real difference to household finances.

Last year almost 650,000 families saved with Tax-Free Childcare. Go to GOV. UK to check eligibility and apply today.

  • There are two types of tax credits: Child Tax Credit or Working Tax Credit. The average claim is worth thousands of pounds a year and can provide a real boost to your finances.

Why are we talking about tax credits now? 

Because the renewal deadline is fast approaching. HM Revenue and Customs (HMRC) is reminding everyone who receives tax credits that they must check or renew their claim before 31 July to avoid their payments being stopped.

Who needs to renew their claim? 

If you receive tax credits HMRC will write to you by 15 June. There are two types of letters to look out for: if your renewal pack has a red stripe across the page then you will need to check the information, renew and report any changes by 31 July. If your renewal pack has a black stripe across the page, you need to check the information is correct, and you will only need to contact HMRC if you have any changes to report.

How do you renew? 

The quickest and easiest way is online – go to GOV.UK and follow the instructions. You can also renew using the secure HMRC app, which you can download for free your smartphone. The app allows you to track your claim and details when you can expect payments. Renewing online or via the app means that you can do it at a time and a place that’s convenient to you.

What if my circumstances have changed?

HMRC does need to be notified of some life changes because it could affect how much you are entitled to. For example, if you move in with a new partner, get married or divorced, your child moves out, or perhaps your working hours are reduced. You can report any changes via the HMRC app or on GOV.UK.

 What help and support is available?

There’s lots of support on GOV.UK and a helpful video on YouTube. And organisations such as Citizen’s Advice also have information on their website.

What happens if I don’t renew by the deadline? 

If you need to renew but fail to, you risk your payments being stopped or having to repay any overpayments.

Can I apply for tax credits? 

No! Universal Credit has replaced tax credits for new customers. You can apply for Universal Credit, or for Pension Credit if you and your partner are of State Pension age or over. Find out more at GOV.UK. 

Can I receive Universal Credit and tax credits?

You cannot claim tax credits and Universal Credit at the same time. Your tax credits will stop if you or your partner apply for Universal Credit.

Universal Credit

By the end of 2024, tax credits will be replaced by Universal Credit for working age claimants. If you receive tax credits you will receive a letter telling you when to claim Universal Credit. You need to claim by the deadline shown in the letter to continue receiving financial support.  Your tax credits will end even if you decide not to claim Universal Credit.

As a small business owner, is there anything else I need to be aware of?

Be aware of scammers! Criminals use deadlines, like the one for tax credits renewals, to trick people who might be expecting to hear from HMRC into sharing their banking or other details. If a phone call, text or email is unexpected, don’t give out private information or reply, and don’t download attachments or click on links. It’s ok to reject, refuse or ignore any requests – only criminals will try to rush or panic you.

You can forward suspicious texts claiming to be from HMRC to 60599 and emails to [email protected].