Interaction between tax credits and tax planning

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

This guidance note looks at how tax decisions can impact tax credit outcomes.

Migration of tax credits to universal credit

New claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants will continue to receive tax credits until they are migrated to the universal credit system. Migration will take place when a change in circumstances is reported or when a migration notice letter is received. This is expected to be completed during 2024. There is information about migration notice letters on the GOV.UK website.

See the Universal credit guidance note.

Considerations for the adviser in respect of tax credits

When tax credits were introduced in April 2003, the tax profession took the view that the tax credits system was something either to be embraced fully or avoided.

The decision was taken by over 98% of advisers to exclude tax credits from the services supplied to clients. Most advisers have a default clause in their engagement letters along the lines of ‘we

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