Tax credits

If money’s tight, you may be entitled to some extra help through tax credits. Lots of people entitled to Child Tax Credit and Working Tax Credit don't claim – make sure you're not one of them.

Picture of coins, bank notes and a purse

Can help put a little extra money in your purse

What are tax credits?

There are two types of tax credit. Working Tax Credit is for people who work above a certain number of hours but are still on a low income. Child Tax Credit is for people on a low income with responsibility for one or more children or young people.

Both types of tax credits are usually paid directly into your account every four weeks but you can choose to have it paid weekly by asking HMRC to change your payments. Tax Credits are administered by HM Revenue and Customs (HMRC).

How much will I get?

Tax Credits are means-tested. The amount you are entitled to will depend on your annual income
and your partner’s income (if you are a couple who live together), as well as other circumstances.

Each case is different, and the calculations are complicated. But you can get a rough idea of what you would be entitled by using this Tax credits calculator.

For a more accurate idea, contact your local Citizens Advice, or call the Tax Credit Helpline (0345 300 3900, Textphone: 0345 300 3909). Bear in mind the Tax Credit Helpline can sometimes have long waiting times and may cost you a lot to call from a mobile, so try and use a landline.

How do I claim?

You need to get a claim form by phoning HM Revenue and Customs (HMRC) Tax Credits Helpline or by ordering a form online. You need to then send the completed form back to HMRC Tax Credits Office. The same claim form is used for both Working Tax Credit and Child Tax Credit.

It’s worth knowing that some people have claimed tax credits, been overpaid, and then had to pay the money back. So it’s important that you tell HM Revenue & Customs about any changes to your circumstances as quickly as possible. Changes that could affect your benefits include moving in with a partner, any change in your (or your partner’s) income, or a change in the number of children living with you.

Detailed rules about tax credits are available on the Gov.uk website. If you’re on a low income, you
may be able to get help on claiming for tax credits from the Low Income Tax Reform Group.

Working tax credit – how do I qualify?

To get Working Tax Credit, you need to be working enough hours a week as well as having a low income.

This may sound straightforward, but it’s actually harder for under-25s to claim Working Tax Credit, as you need to be:

  • Disabled and working more than 16 hours a week
  • A single parent and working more than 16 hours a week
  • In a couple with children, working between you more than 24 hours a week. One of you must work at least 16 hours a week

If you’re 25 or over, you can qualify just by being on a low income and working 30 hours a week. You don’t have to be disabled or a parent.

Some parents can get help with childcare costs through Working Tax Credits.

 

Child Tax Credit – how do I qualify?

Generally, you’re eligible to claim Child Tax Credit if you’re a parent or full-time carer and:

  • have the main responsibility for at least one child under 16
  • or have responsibility for a 16-20 year-old in full-time further (not higher) education or a government-approved training programme

You don’t have to be working to claim, but you’ll need to provide HM Revenue & Customs (HMRC) with details of your and you partner’s (if you have one) income.

You will only be able to claim for up to two children unless an exception applies.

The income that you can have and still claim Child Tax Credit varies depending on your personal circumstances. You can use the Turn2us Benefits calculator to see if you are likely to qualify.

 

Universal Credit and changes to tax credits

Working Tax Credit and Child Tax Credit (along with some other benefits) are gradually being
replaced by a benefit called Universal credit.

This means that in some areas you might need to claim UC instead of tax credits. Please see our guide on Universal Credit for more information.

If you already get tax credits, providing your circumstances remain similar, there shouldn’t be a change until at least 2016. Between 2016 and 2018, those still claiming tax credits will be moved to UC.

How can I appeal a Tax Credits decision?

If you disagree with the decision made on your claim you can usually ask for it to be looked at again
known as a ‘mandatory reconsideration’. If you still disagree with the further decision you can then
appeal to an independent tribunal.

You will only be given 30 days to challenge a decision, so it is important to seek advice and act
quickly.

However the same appeal process does not apply if the HMRC make a decision that you have been
overpaid tax credit. You should seek advice as soon as possible if you are in this situation.

Where can I go for help with tax credits?

Getting benefits and making sense of what you’re entitled to is often a frustrating process. But there are lots of places you can go for help:

  • Citizen’s Advice know all about the benefits system and can help you understand your rights. You can visit your local bureau to get face-to-face advice and support. You must remember to bring along details of your benefits and general financial situation.
  • For more detailed information on tax credits, visit the Gov.uk website.
  • If you want to challenge a decision about your benefit, you can appeal.

Unfortunately we are unable to offer specific money advice at The Mix, but we can give emotional support and guide you to the best places for expert advice if you give us a call on 0808 808 4994

Next Steps

  • Use the Turn2Us calculator to work out what benefits and grants you're entitled to, or call their helpline on 0808 802 2000
  • Moving out for the first time? Get the real Home Truths.
  • Chat about this subject on our Discussion Boards.
  • Need help but confused where to go locally? Download our StepFinder iPhone app to find local support services quickly.

Tags:

benefits

By Danny Sherwood and David Samson

Updated on 13-Feb-2018