PAYE income details used to calculate tax credits claims

07 May 2014

HMRC has published information on what to do if an employee contacts you because they think the income figure on their tax credit Renewal Notice is wrong.

From 6 April 2014, HM Revenue & Customs (HMRC) will use PAYE income information reported in real time to calculate tax credits awards.

Tax credits claimants' Renewals Notices will show the total gross pay for the year, and may therefore include income from more than one source. The Notice will explain that this has come from details their employer has sent to HMRC. The Renewals Notices will not show hours worked.

HMRC's guidance to claimants stresses that it is important that they:

  • check that the income details shown on the renewal notice are correct
  • contact HMRC as soon as possible if they think the details are wrong

However, some claimants may contact their employer or pension provider if they think the income details shown are wrong.

If this happens, the employer or pension provider should:

  • Ask their employee or pensioner for details of the amount and date of the income information shown on the renewal notice. Please note that the figure shown on the Renewals Notice is the total income for an employee or pensioner. If they have more than one source of income, the figure will show the total income for all sources.
  • If practical, compare this with the year-to-date figure in the employer or pensioner's records for that individual at that point in time.
  • If the figure is correct the employer or pension provider should explain this to their employee or pensioner.
  • If the figure is incorrect, or it is not practical to make a comparison, the employer or pension provider should ask the employee or pensioner to phone the number on the Renewals Notice with the correct income information.

It is possible that the information on the Renewals Notice may be out-of-date, for example because the employer or pension provider should send, or has since sent, updated information to HMRC (for example on an Earlier Year Update).

However, even if the employer or pension provider, and employee or pensioner, cannot understand why the figure is different the employee or pensioner should still contact HMRC using the number shown on their Renewals Notice. HMRC will then advise accordingly.

There is no need for the employer or pension provider to contact the Employer Helpline. HMRC will contact the employer or pension provider if there appears to be any issue with the employer or pension provider's submissions.