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Tax credit renewal deadline one week away, warns HMRC

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Image caption Millions of low-income families across the UK receive tax credits

Hundreds of thousands of people have a week to renew their tax credits or face losing the payments, HM Revenue and Customs (HMRC) has said.

Nearly five million households in the UK receive tax credit payments, aimed at helping low-income families with costs such as childcare.

They need to renew details of the claim each year before the 31 July deadline.

Some 865,000 have yet to do so this year, despite an online service being available for the first time.

Last year, more than 650,000 people failed to renew on time.

Some of the excuses for failure to renew, according to HMRC, included "my dog ate the form" and "the form was locked in the boot of my car, and then my car caught fire".

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Image caption The UK tax authority oversees the tax credit system, but has been criticised in the past

There are two types of tax credits. Child tax credits support low-income families, whether or not they are in work. Working tax credits are for working people on a low income, with additional help with childcare costs sometimes included.

In April and June each year a renewal pack is sent to recipients of tax credits by HMRC. This details the breakdown of household income, personal circumstances and payments in the previous year.

If all the details remain the same, claimants have to tick a box to confirm the renewal, then send the forms back. For the first time, this process can now be completed online.

If there are changes to working hours, childcare costs or pay, then these must be declared on the renewal form, so the new payments can be calculated.

Debt woes

When claimants fail to detail changes to their circumstances and are overpaid, then HMRC orders the money to be paid back.

This process has been controversial, at times. Citizens Advice recently reported that in the year to March there was a 14% increase in the number of people getting into financial difficulty, as a result of having to pay the money back.

HMRC denied any harassment of people while pursuing the overpayments.

Yet, a report by an influential committee of MPs earlier this month raised concerns about the tax authority hiring debt collectors to retrieve the money. The Public Accounts Committee said it was particularly concerned about the risks of vulnerable debtors being pursued inappropriately.

It also highlighted the situation that saw millions of pounds in overpaid tax credits written off by HMRC.

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