What are Tax Credits?

A tax credit is a state benefit which will give people that are responsible for children, on a lower income or disabled workers additional money.

There are two types of tax credits- Working tax credits or child tax credits. Depending on your circumstances you might qualify for one or both of them.  All tax credits are tax free and you don’t have to be paying national insurance or tax in order to qualify. How much you will get will be determined on your household income and circumstances.

Tax credits are payed by the state straight in to bank accounts via the tax office. If you are 16 or over and live in the UK you can apply.

Working Tax Credits

Working tax credits are eligible to anyone who works. You can apply if:

  • You are age from 16 to 24 and have a child or qualifying disability
  • You are 25 or over with or without children

You also must:

  • Work a certain number of hours a week
  • Get paid for the work you do
  • Have an income below a certain level

The basic amount of working tax credit is up to up to £1960 a year. You could get more or less depending on your circumstances and income. The amount you get will depend on a number of factors such as:

  • Your relationship status – couples need to make joint claims which is based on household income
  • If you have a disability – More is available if for people getting some disability or sickness benefits
  • Your income – The bigger the income the less you’re likely to get
  • Working hours – You must be working over the minimum weekly hours for you to be eligible. Overtime hours will only count if you work them regularly

Child Tax Credits

You may be entitled to claim child tax credit if you’re responsible for children either:

  • Aged 16 or under- you can claim up until the 31st of august after their 16th birthday
  • Under 20 and in eligible education or training

You don’t have to be working to claim child tax credit. Only one household can claim child tax credit for a child. You may also be entitled to more tax credit if your child is disabled.

The amount you can get depends on how many children you have and whether you are making a new claim or are already claiming child tax credit. The amount is dependent on household income, how many children are living with you and how much money you spend on childcare.

Important changes made to child tax credit

As of the 6th April 2017 there have been two major changes to child tax credit.  From this date on you will no longer get:

  • The family element of child tax credit if there are no children on your claim on are born before 6th April 2017
  • The child element of child tax credit for a third or later child born on or after the 6th April 2017 unless they are one of the exceptions listed below.

This only affects children born after the 6th April 2017. Your tax credits won’t change if all your children are born before the 6th April 2017.

Exceptions only apply to the 3rd and later children on a claim who are born before 6th April 2017.

If you already get child tax credit for 2 or more children you may be able to claim the child element for children born on or after the 6th April if one of the following applies:

  • Multiple births – If another pregnancy results in a multiple birth on or after the 6th April 2017 you will get the child element for all but one of those children.
  • A child you’re claiming for has a child – If you get child tax credit for 2 or more children and one of them has a child you can claim for their child. You can continue to claim till they either leave the household or your child makes a claim themselves.
  • You adopt a child – You can claim for an adopted child that is from a local authority care on or after the 6th April 2017.
  • A child born as a result of non-consensual conception-You can claim for this child if you get Child Tax Credit for 2 or more children and a child born on or after 6 April 2017 is likely to have been conceived either as a result of a sexual act which you didn’t or couldn’t consent to or at a time when you were in an abusive relationship, under ongoing control or coercion by the other parent of the child. You can’t claim this if you live with the other parent of the child. You can however qualify for this whether or not there’s been a court case or conviction of a criminal offence.


How to claim

To claim tax credits you need to fill in form TC600. You can get this form by completing in HMCR’S tax credit claim form online or you can request a form by phoning 0345 300 3900.

To find out whether you are eligible for child or working tax credit and for what amount you are eligible, use the Government’s Tax Credit Calculator.

If you require any further information on tax credits or have some questions about your eligibility, get in touch by emailing info@wkm-accountancy.co.uk or by calling 0115 8240 555.

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