If the economic situation has squeezed your income, you may be entitled to government tax credits. But lots of people entitled to Child Tax Credit and Working Tax Credit don't claim - make sure you're not one of them.
In a nutshell
- Tax credits are government benefits based on income and circumstance
- There are two types of tax credit: Child Tax Credit, generally available if you're responsible for one or more children or young people; and Working Tax Credit, which is generally paid to people in low-paid work
- Both types of tax credit are paid on a weekly or a four-weekly basis, depending on what suits you, usually directly into your bank, building society or Post Office account
Child Tax Credit - how do I qualify?
Generally, you are eligible to claim for Child Tax Credit if you are a parent or full-time carer and have the main responsibility for at least one child under 16 or a young person in full-time further education or a government-approved training programme. You don't have to be working to claim, but you'll need to provide HM Revenue & Customs (HMRC) with the following details:
- Your income
- Your partner's income (if you have one)
- Any other children in your family
What else should I know?
Tax Credits are means-tested. So, if you make a claim, the amount you are entitled to will depend on your annual income and/or your partner's income if you live together.
Each individual case is different, so it's worth speaking to someone at Citizens Advice Bureau (CAB) or calling the Tax Credit Helpline to see if you qualify. But, generally, you're not likely to get Child Tax Credit if:
- you have one child, and your annual income is more than £26,000
- you have two children, and your annual income is more than £32,000.
But remember the income limit changes depending on personal circumstances. You could still qualify if you pay for childcare, are disabled, or have more than two children.
Child Tax Credit is paid directly to the parent or carer.
How do I find out if I can claim?
- Call the Tax Credit Helpline on 0844 856 4312.
- Have your National Insurance number at hand as you will be asked to provide it as proof of identity.
- It's worth knowing that some people have claimed tax credits and have ended up having to repay money they weren't entitled to. It's important that you tell HM Revenue & Customs about any changes to your circumstances as quickly as possible. Changes which could affect your benefits are your boyfriend or girlfriend moving in with you, getting a better paid job (or losing your job) or having a change in the number of children living with you.
Working tax credit - how do I qualify?
You should be eligible to claim if you are aged 16 or over and:
- You are disabled and work more than 16 hours a week
- You are a single parent and work more than 16 hours a week
- You are in a couple with children and between you work more than 24 hours a week. One of you must work at least 16 hours a week.
Otherwise you must normally be aged 25 or over and work 30 hours a week. The amount you receive will be calculated based on your personal income
How do I find out if I can claim tax credits?
The tax credits rules are complicated, so it's worth getting help working out what you qualify for. You can talk it through with someone by calling the Tax Credit Helpline on 0844 856 4312. Detailed rules about tax credits are available on the HMRC website. If you're on a low income, you may be able to get help on claiming for tax credits from the Low Income Tax Reform Group.
Universal credit and changes to tax credits
The world of tax credits is set to all change as part of a huge benefit system overhaul.
The government is in the process of giving the benefit system a dramatic makeover, and everything is a tad up-in-the-air and complicated.
But the grand plan is to combine common benefits such as Jobseekers Allowance, Housing Benefit and tax credits into one personal allowance called universal credit. To add to the confusion, it's not actually 'universal' at all as it won't replace disability living allowance, child benefit, statutory sick pay, maternity pay, or maternity allowance.
The exact figures and policy are still being discussed, and universal credit won't be introduced until 2013. We at TheSite.org will provide you with the gritty detail as and when we get it.
Remember to tell your benefits advisor if your circumstances change - for example if you get a pay rise, new job or get married. If you don't you could face a £50 fine as well as having to pay back any extra benefit. See GOV.UK for more information.
Read the comment policy
Use our free question and answer service and speak to an expert!