Tax credits

This advice applies across the UK.

The information on this page is for existing tax credit claimants. It is no longer possible to make a new claim for tax credits, as new claimants are expected to claim Universal Credit instead.

In this article

What are tax credits?

There are two types of tax credit payments:

• Working Tax Credit (WTC) – a means-tested payment for working people on low incomes.
• Child Tax Credit (CTC) – a means-tested payment for people with children.

The government is in the process of replacing tax credits with Universal Credit.

It is no longer possible to make a new claim for tax credits. New claimants must claim Universal Credit instead.

If you are already on Child Tax Credit and you or a partner start work, you can have Working Tax Credit payments added onto your Child Tax Credit award. This counts as a review of an existing tax credit claim, rather than a new claim.

The government expects to move all existing tax credit claimants onto Universal Credit in a process known as managed migration. This process is now almost complete, and the majority of Tax Credit claimants have now been asked to claim Universal Credit. Those claimants who have not yet been issued with a managed migration notice asking them to claim Universal Credit should have received this by the end of 2024. The Tax Credit office is due to close in April 2025. 

Once the Department for Work and Pensions (DWP) selects you to migrate onto Universal Credit, you won’t transfer to Universal Credit automatically. Instead, you will have to make a claim.

You’ll receive a “migration notice” in writing that your tax credits will be ending. You’ll have three months from the date on your migration notice within which to make a claim for Universal Credit. After this, your tax credits will stop.

Child Tax Credit

Child Tax Credit is for families who have at least one dependent child. This means a child under 16 or a 16-19 year old who is in certain types of education or training.

The amount that you get depends on your family circumstances and your annual income. You get extra Child Tax Credit payments if you have a child with a disability who gets one of:

• Disability Living Allowance (DLA).
• Personal Independence Payment (PIP).
• The Scottish Child Disability Payment or Adult Disability Payments.

Or who is registered blind.

Make sure that you tell the Tax Credits Office as soon as you can if either:

• You get DLA or PIP (or their Scottish equivalents) at any rate for your child.
• You have an existing award increased to the highest rate of the DLA/Child Disability Payment care component.
• You have an existing award increased to the enhanced rate of the PIP/Adult Disability Payment daily living component.

If you wait more than a month before telling them, you are likely to miss out on getting these extra tax credit payments backdated. 

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 either:

• 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. (This goes down to 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 £170 a week for one child and £300 a week for two or more children. The exact 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 get?

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.

Who pays tax credits?

HM Revenue pays both tax credits. To speak to them about your tax credits award, call 0345 300 3900.

Tax credits overpayments

Sometimes people are overpaid tax credits. For example, if there’s a change in their circumstances or the Tax Credits Office makes a mistake. See the government’s website for more information.

If you disagree about the overpayment

You may disagree that you were overpaid tax credits or think the amount of overpayment is wrong.

In this case, you can ask for a mandatory reconsideration and subsequently appeal that decision in the normal way. See our page on revisions and appeals.

If you disagree with the decision to recover

You might accept that you were overpaid tax credits and that the overpayment was correctly calculated, but remain unhappy with the decision to recover the overpayment. For instance, you may think the overpayment was an official error.

In this case, you cannot ask for a mandatory reconsideration nor appeal HMRC’s decision to recover that money. Instead, you can dispute the decision to recover using form TC846. You need to do this within three months of the decision. A late dispute may be accepted in exceptional circumstances.

Make sure that you explain why you think the overpayment was caused by HMRC. Also explain any steps you took to contact HMRC.

Unfortunately, HMRC will continue to recover the overpayment while it is looking at your dispute. However, if your dispute is successful, any amount already recovered should be refunded to you.

You can also ask HMRC not to recover some or all of the overpayment if this would cause you hardship.

Other benefits you might be entitled to

Disability Living Allowance

Universal Credit

Personal Independence Payment (PIP)

Carer’s Allowance

Tax credits

Help with Council Tax and rates

“Bedroom tax”

Other benefits

Welfare benefits in Scotland

< Benefits & tax credits

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