What are Tax Credits?
Tax Credits are given to citizens by the Government to help support their income. There are two types of tax credits: child tax credits and working tax credits. This guide will explain what both of them are and how to go about claiming them.
Child Tax Credits
You could receive Child Tax Credits for each child you are responsible for if they are either under 16 or under 20 and in approved training. For this type of tax credit, you don’t need to be employed but you cannot claim it alongside Universal Credit. You can get money for each child that qualifies and Child Tax Credit won’t affect your benefits. The amount that you get is dependent on your individual circumstances. Only one household can claim tax credit for a child, so take this into account if you are separated from the other parent.
What you’ll get if you are eligible
You could get a basic amount of up to £545 a year- this is the ‘family element’. You could also be eligible for extra elements on top of this, depending on things like income and circumstances.
For the 2015/2016 tax year:
- For each child: Up to £2,780 a year.
- For each disabled child: Up to £3,140.
- For each severely disabled child: Up to £1,275 on top of the child and disabled child element.
You’ll be paid into a bank or building society account. You will either be paid every week or every 4 weeks until the end of the tax year, unless your circumstances change.
There is not a set income limit for tax credits as it depends on circumstances. It can go up if you pay for approved childcare or down if you only have one child.
Change in circumstances:
Your tax credits can increase or decrease depending on your circumstances, for example if your child leaves home or if your family or working life changes.
Criteria for eligibility depends on the child’s age and whether you are responsible for them.
You are responsible for a child if:
- They live with you all of the time.
- They normally live with you and you are the main carer.
- Their toys and clothes are kept at your home.
- You pay for their meals and give them pocket money.
If you share responsibility for a child and you can’t decide who can claim, you can both apply and the Tax Credits office will decide on your behalf.
Your child must also be under the age of 16 or under 20 and in approved education or training, such as:
- A Levels
- Scottish highers
- NVQs up to Level 3
- Access to apprenticeships
Changes you must report to the Tax Credits office:
- Your child or partner dies
- Child leaves home
- Living circumstances change e.g. you move in with a partner, get a divorce.
- You go abroad for 8 weeks or more.
- You are given a prison sentence
- Don’t return to work following a gap or leave of absence.
- Are ill/in hospital for more than 28 weeks.
- You leave the UK permanently.
If you receive tax credits that you aren’t entitled to, you will have to repay the money and you may be fined, so it is important you report any changes in circumstances as soon as possible.
Working Tax Credits
Working Tax Credits are designed to support people on low incomes. If you are aged 16-24 and you have a child or qualifying disability, or alternatively if you are over 25, you could be eligible to claim them. You must work a certain number of hours per week, get paid for the work that you do and have income below a certain level.
What you could get:
You will get a basic amount of up to £1,940 a year with elements on top depending on your circumstances and income.
Couple applying together: Up to £2,010 a year.
Single parent: Up to £2,010 a year.
Working at least 30 hours a week: Up to £810 a year.
You have a disability: Up to £2,970 a year.
You have a severe disability: Up to £1,275 a year, usually on top of the disability payment.
Paying for approved childcare: Up to £122 a week for one child, or £210 for two.
Money will be paid directly into your bank/building society account, every week or 4 weeks.
Changes you need to report:
- Child leaves home.
- You stop paying for childcare.
- A job starts or stops (make sure to provide as much information as possible)
- Your living circumstances change
- Working hours fall above or below the amount to qualify
How to claim Child/ Working tax credits
To claim tax credits, contact the helpline for a claim form. It can take up to two weeks to process your claim, and you must have information such as your National Insurance number, your income for the last tax year and details of any childcare costs to hand when you call.