Tax Credits Declaration

It's one of the measures to avoid the overpayments farce seen in previous years.

TC's you are due are based on your current year income.

But as a starting point your previous year's income is used, unless you tell them of a change in expected income. It's then adjusted when your claim is renewed, and you may owe them or they may owe you depending on the difference between the previous year's income and the current year's.

Because the masterminds behind the tax credits didn't realise this would lead to all sorts of problems, they did 2 things. They massively increased the income disregard between one year and the next - so if your current year income is no more than 25,000 greater than previous year's, you won't owe them anything. They also reduced the deadline for putting your renewal in - since until they get this you'll still be getting TC's based on your income 2 tax years ago, so you could easily build up an overpayment as the disregard only applies to one year.