HM Revenue & Customs (HMRC) has warned parents that they could be missing out on up to £500 of tax-free income when renewing this year’s tax credits.
The notice comes ahead of the 31 July deadline, before which taxpayers must renew their tax credits to avoid having their payments stopped or amended.
However, the tax office says thousands of parents could be missing out on hundreds of pounds by reporting their income incorrectly.
It explains that many claimants who receive statutory maternity pay do not understand that some of this pay should be deducted from their gross pay when their tax credits awards are calculated.
Under this system, parents can deduct any payments they have received for statutory maternity, paternity, shared parental or adoption pay up to a value of £100 a week.
It means that those incorrectly reporting income could have been entitled to, on average, an extra £495 across the year.
Angela MacDonald, HMRC’s Director General for Customer Services, said: “We want to make sure all our customers get all the help they’re entitled to when they renew their tax credits.
“As the 31 July deadline for tax credits renewals approaches, we want to ensure nobody misses out. That’s why we’re urging parents to make sure they remember to deduct payments for statutory maternity pay, paternity pay, and adoption pay.”
A full guide to tax credits, and what can be deducted, can be found here.