TAX Credits are a state benefit that helps working people on low pay make ends meet.
Most new applicants will be rolled onto Universal Credit rather than receiving the credits, but there are some exceptions.
There are also plenty of people who are still on the old-style system, and the final deadline for being moved across has been pushed back to 2024.
Anyone who already receives credits must renew them every year, or miss losing out on thousands.
Here is our simple guide to who gets them, how much they are worth, and when you might be moved onto Universal Credit instead.
What are HMRC Tax Credits?
There are two types: Working Tax Credit and Child Tax Credit.
Both aim to help households on lower pay avoid crippling poverty.
You can only make a new claim for tax credits if you:
- get the severe disability premium, or are entitled to it
- got or were entitled to the severe disability premium in the last month, and you’re still eligible for it.
If you cannot make a new claim for Child Tax Credit, you may be able to apply for Universal Credit.
If you and your partner are State Pension age or over, you might be eligible for Pension Credit.
Who is eligible for Tax Credits?
If you receive the severe disability premium or are eligible for it – you can still make a new claim for 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 Credit
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 credit
You can claim up until 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.
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).
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.
If you have two children born before that date the maximum you can earn and get credits is about £35,000.
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 £3,040 per year, and you might get extras on top.
The extra elements include:
- A couple applying together: up to £2,045 a year
- A single parent: up to £2,045 a year
- Working at least 30 hours a week: up to £825 a year
- Disability: up to £3,220 a year
- Severe disability: up to £1,390 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 £2,830 per child
- For each disabled child: up to £3,415 (on top of the child element)
- For each severely disabled child: up to £1,385 (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 on Monday to Friday between 4pm and 8pm.
The numbers are:
Telephone: 0345 300 3900
Textphone: 0345 300 3909
Outside UK: +44 2890 538 192
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.