TAX Credits are a benefit payment that can top up the money you earn if you’re not getting enough to support you, or if you have children.
Working Tax Credits and Child Tax Credits are being replaced by Universal Credit, but there are some exceptions where you can still apply for tax credits when making a new claim.
There are also plenty of people who are already claiming tax credits and they can continue to do so before having to move over to Universal Credit.
Everyone claiming Tax Credits will be moved over to Universal Credit by September 2024 under the government’s plans for the gradual roll out of the new welfare system.
Anyone who already receives Tax Credits must renew them every year, or miss losing out on thousands of pounds.
Here is our simple guide to who gets Tax Credits, how to apply for the payment and how much you can earn and still claim.
What are Tax Credits?
Tax Credits are a type of state benefit.
There are two Tax Credits: Working Tax Credit and Child Tax Credit.
Working Tax Credits are for those who are earning a low income from work.
Child Tax Credits are for those with kids who may or may not be working.
You could claim one or both tax credits.
Both aim to help households on lower incomes to cover everyday essentials.
The payment is made by the government to those who are eligible, depending on how much you earn, how many hours you work, whether you have kids (and their age).
Who is eligible for Tax Credits?
In most cases, you will have to make a claim for Universal Credit because Tax Credits are being replaced.
But, if you previously made a claim for Working Tax Credits or Child Tax Credits in the last tax year, you may still be able to apply.
You may be able to add on a claim for Child Tax Credits if you are already getting Working Tax Credits, or claim Working Tax Credits if you are already claiming Child Tax Credits.
You can no longer make a new claim for Tax Credits if you are getting (or previously got) a severe disability premium (SDP).
Before 27 January, 2021, anyone claiming SDP could not claim Universal Credit but they now can.
If you cannot make a new claim for Tax Credits, you may be able to apply for Universal Credit.
If you and/or your partner are of State Pension age or over, you might be eligible for Pension Credit instead of Tax Credits.
If you are able to claim Tax Credits, you will also have to meet some additional criteria – these vary depending on the type of credits you’re applying for.
Working Tax Credits
You must work a certain number of hours a week to qualify. These limits are:
- Aged 25 to 59 – at least 30 hours
- Aged 60 or over – at least 16 hours
- Disabled – at least 16 hours
- Single with one or more children – at least 16 hours
- Couple with one or more children – usually, at least 24 hours between you (with one of you working at least 16 hours). There are some exceptions that are detailed on the gov.uk website.
You can use the tax credits calculator to check if you work the right number of hours.
Your work can be for someone else as a worker or employee, or for yourself if you are self-employed.
However, the rules are more strict for the self-employed and your work has to be considered commercial, regular and organised.
Child Tax Credits
You can claim Child Tax Credits up to August 31 after your child’s 16th birthday.
You keep getting the benefit until their 20th birthday, if they are in approved education or training,
You can only claim Child Tax Credit for children you’re actually responsible for.
If you are able to make a new claim for Child Tax Credit, what you get depends on when your child or children were born.
Before April 6, 2017 and you get the child element of Child Tax Credits, which applies for all your children, and a basic amount called the “family element”
After April 6, 2017 and the child element is only for up to two children, and the family element is only if you have at least one child born before this date.
SWITCHING TO UNIVERSAL CREDITS
Most people who receive Tax Credits will be switched over to Universal Credit by 2024.
The moves are being implemented area by area.
You don’t need to do anything now – HMRC will alert you when it’s time to switch.
But if your circumstances change, for instance if you move in with a partner, have a child, or get a new job – that might see you moved across to Universal Credit earlier.
You have to report any changes in circumstances to HMRC straight away.
If you or your partner apply for Universal Credit it could stop your Tax Credits
If you’re already claiming, it depends when your claim started.
Before April 6, 2017 and you’ll get the family element.
The child element will be for kids born before this date, and only for up to the second child if born after this date.
After April 6, 2017, you get the child element up to two children, and the family element only if at least one of your children was born after this date.
There are some exceptions, such as having twins.
How much can you earn and still get tax credits?
For Working Tax Credit there is no set limit for income because it depends on your circumstances (and those of your partner).
For example, the government says that it could be £18,000 for a couple without children or £13,00 for a single person without children.
It can be higher if you have children or if you are disabled.
This is also true for Child Tax Credit – but broadly speaking if you have one child and your total household income goes over £25,000 then you’ll get no top up to your income.
If you have two children born before April 6, 2007 the maximum you can earn and get credits is about £35,000.
Essentially, the more you earn the less you’ll get.
How much money will I get for tax credits?
How much you receive will depend on your personal circumstances including how much you earn and how many children you have.
Working Tax Credit
With Working Tax Credits you are entitled to a basic amount worth up to £2,005 per year, and you might get extras on top.
The extra elements include:
- A couple applying together: up to £2,060 a year
- A single parent: up to £2,060 a year
- Working at least 30 hours a week: up to £830 a year
- Disability: up to £3,240 a year
- Severe disability: up to £1,400 a year (usually on top of the disability payment)
- Paying for approved childcare: up to £122.50 (one child) or £210 (two or more children) a week
Child Tax Credit
The amount you are entitled to depends on when your children were born.
If your kids were born before 6 April 2017, you could get the ‘child element’ of Child Tax Credit for all of them.
You’ll also get the basic amount, known as the ‘family element’.
If any of your children were born on or after 6 April 2017, you could get the child element for up to two of them.
You might get the child element for more children if exceptions apply.
You’ll only get the family element if at least one of your children was born before 6 April 2017.
Here’s how much each element is worth:
- Family element: up to £545
- Child element: up to £2,845 per child
- For each disabled child: up to £3,435 (on top of the child element)
- For each severely disabled child: up to £1,390 (on top of the child element and the disabled child element).
For both Working Tax Credit and Child Tax Credits you can use a benefits calculator to find out how much you could get.
How to apply
To apply for Tax Credits you need to call HMRC’s Tax Credits helpline:
- Monday to Friday between 8am and 8pm
- Saturday between 8am and 4pm
- Sunday between 9am and 5pm
The number is 0345 300 3900 and calls cost 45p a minute from mobiles or 12p a minute from landlines, unless you have free minutes as part of your contract.
You can also speak to an adviser online.
If you are not eligible for Tax Credits – you might be entitled to Universal Credit.
To find out how to apply follow our step by step guide.
If you are already getting Tax Credits you can manage your account online.