Interaction of tax credits and benefits
HMRC have issued an updated notice to remind recipients of tax credits that their entitlement to certain benefits may be restricted. The payment of certain benefits is means tested based on income and savings.
As tax credits (working tax credit and child tax credit) increase income this can affect entitlement to the following benefits:
- Council Tax Benefit
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Pension Credit
HMRC recommends notifying the relevant benefits office where there is an increase or decrease in tax credits to ensure that you are not claiming too much or too little in benefits.