Tax Credits

What is Working Tax Credit?

As the name of this benefit suggests, Working Tax Credit can only be claimed if you are in work or some kind of employment. HMRC would class an individual as ‘working’ if they are employed, self employed, or a combination of the two.

So for example, you might be working for an employer as a part time worker as well as doing a bit of self employed work in your spare time.

Basically, you must be low paid, have a small income, or are living in a low income household to get Working Tax Credit (WTC).

This part is important:

If you are in an area where Universal Credit is operating as a benefit system, you will not be able to claim Working Tax Credit. This is because your rights to benefits do not qualify you for both at the same time.

The most important factor is that you in employment and classed as low paid or with low income total. To qualify, you must also be working a minimum number of hours each week.

Note: There are three basic age qualifying groups that have different criteria as to how much you earn.

Age and Hours You Work

The main criteria taken into account is that of your age group. There are different sections of Working Tax Credits that apply to the various age groups. For example:

  • 25 to 59 – you must be working at least 30 hours a week
  • 60 or older – you must be working at least 16 hours a week
  • Disabled – you must be working at least 16 hours a week
  • Single with one (1) or more children – you must be working at least 16 hours a week
  • Couple with one (1) or more children – it usually needs to be at least 24 hours a week between you (one of the couple should be working at least 16 hours)

Exceptions for Couples with Children

If you work less than 24 hours a week (between you) you can still claim if (either):

  • You work at least 16 hours a week and you are disabled or at least 60 years old
  • You work at least 16 hours a week and your partner is (either):
    • Incapacitated (receiving certain qualifying benefits due to disability or ill health)
    • Entitled to the Carers Allowance
    • In hospital
    • In prison

Self Employed and Working Tax Credits

What does employment or working mean? In this case, it means you are either working for another person OR you are legally self employed for tax purposes. That usually means you are making (or aiming) for a profit.

Self employment must be commercial, organized, and regular. It should have all the normal aspects of proper self employment in place (e.g. proper insurance, tax records).

How Does Child Tax Credit Work?

Child Tax Credit (CTC) is not a benefit as such, but a credit set against your income and other circumstances. The payments follow the same process as most other welfare benefits (into a secure bank or building society account).

You do not have to be in work to be for Child Tax Credit. How much tax credit you get will depend entirely on your own personal and financial circumstances. Child Tax Credit does not affect your normal Child Benefit payments.

Eligibility for Child Tax Credit

  • You have, or are responsible for, a child (or children) under the age of 16. Being ‘responsible for a child’ means (either):
    • They live solely with you at all times.
    • They normally live with you and you are the child’s main carer, they keep their toys and clothes at your home, you pay for their meals, and you give them pocket money.
  • You can claim up until the 31st of August AFTER the child’s 16th birthday. That could mean you can claim for tax credits up to 12 months after the child turns 16.
  • The child is under the age of 20 years and in an eligible training scheme or education defined as ‘approved education’. This does not mean that they at an approved school!
  • If you are receiving Universal Credit you cannot claim for Child Tax Credit at the same time.
  • Only one household can get Child Tax Credit. So, if you are living apart from your partner only one of you can claim the tax credits.
  • Changes from the 6th of April 2017 mean the ‘Child Element’ is only available for a maximum of two (2) children. You will not be eligible for the Child Element for a third or fourth child. But, you will still be entitled to the basic family element.

What if you share responsibility for a child with another person and you can’t agree who should claim you can both apply? In this case, the Tax Credit Office would make the decision for you.

You can claim for an adopted or fostered child if you’re not getting money from your local council (Health and Social Services Board in Northern Ireland). If you do get money you should call the Tax Credit Helpline to find out whether you can claim – or not!

If the Child is Disabled

There could be extra Child Tax Credits available if the child (either):

  • Gets Disability Living Allowance, Personal Independence Payment, or Armed Forces Independence Payment.
  • Is certified blind (or was within 28 weeks of your tax credits claim). You would still qualify for this disabled element even if Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment stops due to the child going into hospital.

How Much is Child Tax Credit?

The maximum amount you can get each year is:

  • £545 for the basic ‘family element’
  • £2,780 for each ‘child element’
  • £3,355 for each disabled child (on top of the child element)
  • £1,360 for each severely disabled child (on top of the child element and the disabled child element)

Note: These figures depend on several factors, such as your income, how many children you have living with you, and whether or not you have childcare costs.

How to Claim Child Tax Credit

Universal Credit has already replaced Child Tax Credit for the majority of claimants. The helpline telephone number for Child Tax Credits is 0345 300 3900.

You will be able to make a “new” claim for Child Tax Credit if you are getting the severe disability premium (or you received it in the past month and you are still eligible for it).

Related Guide: The UK Rules website (or GOV.UK) has further advice and information about Tax Credits (e.g. Working Tax Credit and Child Tax Credit).