Tax credits

Child tax credit and working tax credit

What are tax credits?

How do I claim?

Things to note

Where can I get further help?

 

What are tax credits?

There are two tax credits – child tax credit and working tax credit. You can claim one or both of them, depending on your household circumstances. HM Revenue & Customs (HMRC) deal with claims.

You can claim child tax credit if you are responsible for a child (or children) whether or not you work. You can claim working tax credit if you work the required number of hours for your age whether or not you have children. You can find out how to qualify for child tax credit and working tax credit on our main LITRG website. 

The amount of tax credits you actually get depends on a number of factors including the total amount of taxable income you and your partner may have; whether you, your partner, or your children have a disability or long-term health problem; the number of hours you work; and the amount you pay for childcare. The GOV.UK website has a tax credits calculator which may give you a very rough estimate of what you might get (note that it calculates entitlement from the day you use the calculator until the end of the current tax year – 5 April 2016).

How do I claim?

To claim tax credits you must normally complete a TC600 claim form. This form is available by contacting the HMRC tax credits helpline on 0345 300 3900 (Textphone 0345 300 3909). You can also request a claim form online.

Things to note

  • Unlike other social security benefits, tax credits are calculated as an annual amount and paid in weekly or monthly instalments during the tax year (which runs from 6 April in one year until 5 April the next year). The amount paid is based on your circumstances at the time you claimed, but normally using your income from the previous tax year. There are exceptions, e.g. if your household income this tax year is likely to be higher by more than £2,500, or lower by more than £2,500 then HMRC will use current year income (less £2,500 if it is higher or plus £2,500 if it is lower) to calculate your award.
  • The income rules for working out how much tax credit you might get can be quite confusing. You should get advice to check how these rules might affect you, especially if this tax year’s income is likely to be different from what it was in the last tax year.
  • Claims can only be backdated for up to 31 days, so you should not delay claiming if you think you might qualify. Longer backdating can be claimed if you are waiting for a disability benefit decision, you can find out more about this on our main LITRG website
  • You may be entitled to extra tax credits if you are awarded certain disability benefits. See our disability and tax credits guide on the main LITRG website. 
  • Some changes must be reported, e.g. if you and your partner permanently separate or if you stop work, or your working hours drop below the level you need to claim. However, it’s also a good idea to tell the tax credits office of other changes, like changes in income, so the amount you are being paid is as accurate as possible during the tax year.
  • At the end of the tax year, the tax credits office will send out paperwork to check if there have been any changes, so it can work out whether the correct amount was in fact paid.  If you have been paid too much, this will usually have to be repaid. Sometimes HMRC can make mistakes (e.g. by not acting on changes you have reported) and you should get advice if you do not think you should have to pay back an overpayment. The Low Incomes Tax Reform Group (LITRG) website has some useful information about challenging tax credit overpayment decisions.
  • Even if you do not think you qualify for any tax credits at the moment because your income is too high, it might be worth making a ‘protective claim’ especially if you think your income may drop during the tax year e.g. because of redundancy or sickness, or just in case your job does not work out. 

Child tax credit and working tax credit are gradually being replaced by universal credit (UC). This will happen between April 2013 and 2018. In some areas, where UC digital has rolled out, no new claims for tax credits are possible. In those areas, you must claim UC instead.

Where can I get further help?

The HMRC website contains detailed information about tax credits.

We also publish detailed information about tax credits on our main Low Incomes Tax Reform Group website.