Changes in your income can aff ect the amount of tax credits you are entitled to. If your income changes, you do not have to report this until the end of the tax year, although you may wish to do so to avoid being under or overpaid. After the initial award has been made on the basis of your income for the previous tax year (April 2007-April 2008), you can ask for a new award based on your income for this year, if either:

• your income for this year is over £25,000 more than your 2007/08 income ( the first £25,000 of the increase in income is ignored until the start of the next tax year, but an increase above that amount means you are building up an overpayment); or
• it is lower than your 2007/08 income, which means you are being underpaid.

This might aff ect you if, for example, you were previously receiving Income Support and you are now working, or if you were previously working and are now on maternity leave. If you ask for a new award, you will have to estimate what you expect your income for 2008/09 to be.

Next: When should I report changes in income?