Tax credits

There are two tax credits:

  • Working tax credit (WTC) - a means-tested tax credit for working people on low incomes.
  • Child tax credit (CTC) - a means-tested tax credit for people with children.

The government is in the process of replacing tax credits with the new Universal Credit. If you live in an area where the Universal Credit full service has been introduced and you have less than three dependent children, you will not be able to make a new claim for tax credits. You must claim universal credit instead. 

Child tax credit

Anyone with a dependent child can claim child tax credit.

Whether you receive any payments will depend on your family circumstances and your annual income. You can apply whether you work or not, and it is paid on top of child benefit.

You get extra child tax credit payments if you have a child with a disability who gets Disability Living Allowance (DLA), Personal Independence Payment (PIP) or who is registered blind.

Working tax credit

Eligibility for working tax credit depends partly on income but also on the number of hours you work.

If you have children, you qualify if your income is low enough and:

  • you are a lone parent and work at least 16 hours per week
  • you are part of a couple in which one partner works at least 16 hours per week and you work at least 24 hours per week between you

However, a couple with children need only work 16 hours per week between them if:

  • one partner works at least 16 hours per week and the other partner is entitled to Carer's Allowance
  • one partner is disabled or over 60 and works at least 16 hours per week

If you don't have children, you qualify if your income is low enough and you work 30 hours a week (16 hours if you are disabled or over 60).

Tax credits and childcare

Working tax credit can include help towards certain registered childcare costs. You could get up to £122.50 a week for one child and £210 a week for two or more children although the amount that you receive towards your childcare costs will vary depending on your income.  

Childcare costs can be included only for:

  • lone parents who are working at least 16 hours a week
  • couples who are both working 16 hours
  • couples where one partner works 16 hours and the other is entitled to Carer's Allowance or either incapacitated or in hospital/prison.

How much tax credits will I receive?

The amount of tax credits you get is usually based on your annual taxable income and your family size. If you have a partner, your joint income is taken into account. Unlike most other means-tested benefits there is no limit on how much capital or savings you can have.

People in work could also get other benefits, including help with rent and council tax if your income and savings are low enough.

How to claim tax credits

Both tax credits are paid by HM Revenue and are claimed on the same form - TC600. This is available from your local HM Revenue office or the tax credits helpline, 0345 300 3900.

Couples (this includes same sex partners) must make a joint claim.

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