Working Tax Credit
Working Tax Credit is designed to top up your earnings if you work and you’re on a low income. Use this guide to find out whether you’re eligible for the benefit, what the income thresholds are, how much you’re entitled to and how to claim.
- What is Working Tax Credit?
- Who qualifies for Working Tax Credit?
- How much is Working Tax Credit?
- Use the Working Tax Credit Calculator
- Working Tax Credit and help with childcare costs
- How to claim Working Tax Credit
- Keeping your tax credits up to date
- Other tax credits you might qualify for
- Working Tax Credit and Universal Credit
What is Working Tax Credit?
Tax credits are tax-free and you don’t have to be paying National Insurance or tax to qualify.
Working Tax Credit is designed to top up your earnings if you work and you’re on a low income.
You can’t claim Working Tax Credit if you already get Universal Credit.
Who qualifies for Working Tax Credit?
Depending on your circumstances, you might be able to claim Working Tax Credit if:
- You’re aged between 16 and 24 and have a child, or a disability, or
- You’re 25 or over and working a minimum number of hours.
|Your circumstance||Minimum number of working hours a week|
|Aged 25 to 59||30|
|Single with one or more children||16|
|Couple with one or more children||Usually at least 24 hours between you (with one of you working at least 16 hours)|
Working Tax Credit income threshold
There’s no clear income threshold for Working Tax Credit.
When you apply, the Tax Credit Office will take into account your circumstances (and those of your partner) when deciding how much you’re entitled to.
The table below gives you a rough idea of the income limits if you:
- Are over 25
- Don’t have a disability
- Don’t have children
The table below gives you a rough idea of how much you can earn to be eligible for Working Tax Credit.
You can see the full entitlement tables for tax credits at GOV.UK.
|Number of children||Annual household income limit for 2016-17|
|None - single person||£13,000|
|None - couple||£18,000|
If you have dependent children, your annual household income limits may be higher and you might be entitled to further tax credits.
How much is Working Tax Credit?
If you’re eligible, you’ll get a basic amount of £1,960 a year (known as the ‘basic element’).
You’ll get extra amounts (‘elements’) on top of this, depending on your circumstances.
The rates for the 2016 to 2017 tax year are:
|For a couple applying together or a single parent (the ‘couples and lone parent element’)||Up to £2,010|
|If you work at least 30 hours a week (the ‘30 hour element’)||Up to £810|
|If you work and are disabled (the ‘disability element’)||Up to £2,970|
|If you’re severely disabled (the ‘severe disability element’)||Up to £1,275|
|If you’re paying for registered or approved childcare (the ‘childcare element’)||Up to 70% of your childcare costs|
Use the Working Tax Credit Calculator
The amount you get for each element depends on things like:
- Your income
- How many hours you work
- Whether you have a disability
- Whether you have children
- Whether you pay for childcare
For example, if your annual household income is £6,420 or below, you’ll get the maximum amount for each Working Tax Credit element you qualify for. This is called the ‘income threshold’ - anything you earn above that will reduce the amount you can get.
Working Tax Credit and help with childcare costs
If you work at least 16 hours a week and pay for childcare, you might be able to claim the ‘childcare element’ of Working Tax Credit to help with up to 70% of your childcare costs.
- If you’re in a couple, you need to be working at least 16 hours each to qualify.
- You can be eligible if you’re employed or self-employed.
- In most cases, you must use registered or approved childcare. This can include childminders, playgroups and nurseries.
How much can you get?
With the childcare element, you can get help with up to 70% of your childcare costs.
The table below shows how much you could get in the 2016-17 tax year:
|Number of children||If you pay up to:||You could get up to:|
|1||£175 a week||£122.50 a week|
|2 or more||£300 a week||£210 a week|
If you pay more than this for childcare, you won’t be able to claim the childcare element of Working Tax Credit.
If you qualify for the childcare element, you won’t necessarily get the full amounts.
How much you get will depend on:
- Your income
- The hours you work
- Your childcare costs
How to claim Working Tax Credit
Call the Tax Credits Helpline on 0345 300 3900 to get a claim form.
If you’re already claiming tax credits, call the Tax Credit Helpline to update your claim.
Keeping your tax credits up to date
You need to renew your tax credits claim every year if you want to keep getting them.
The Tax Credits Office will write to you to telling you what you need to do to renew your tax credits.
If your circumstances change at any time during the year (for example, if your income changes, your child leaves home or you move house), you should call the Tax Credit Office on 0345 300 3900 to let them know.
Changes in your circumstances can affect the amount of money you should be getting. For example, if your income drops, you may get more support. Or if your income increases, you could have to pay back any money you’ve been overpaid at a later date if you don’t let the Tax Credits Office know.
Tax credits and income changes
From April 2016, the amount by which your income can change before you have to tell the Tax Credit Office falls from £5,000 to £2,500. This is called the income disregard.
If your income goes up by £2,500 or more and you delay telling the Tax Credit Office or wait until the next time your claim is due to be re-assessed, you may find that you have been overpaid tax credits.
You will be asked to pay this extra money back, either by reducing your future tax credits or by direct payments if your tax credits have stopped.
To avoid a bill, it’s even more important to tell the Tax Credit Office within 30 days of when you get the extra money. It’ll be easier for your tax credits to be adjusted, and decrease the chance you’ll be chased for overpayments at a later date.
It also works the other way. If your income falls by £2,500 or more, you might be entitled to more tax credits.
If you are asked to repay tax credits and will struggle to pay, speak to the Tax Credit Office as soon as you can, and certainly within 30 days.
Find out more about what to do if you are overpaid tax credits on the GOV.UK website
Other tax credits you might qualify for
If you have children and you’re on a low income, you might also be eligible for Child Tax Credit.
When you apply for Working Tax Credit, you’ll also be told whether you qualify for Child Tax Credit. There’s no need to claim them separately.
Working Tax Credit and Universal Credit
Working Tax Credit is one of the six benefits being phased out and gradually replaced by Universal Credit.
If you’re already claiming Working Tax Credit you probably won’t be affected right now.
Until you’re asked to make a claim for Universal Credit, you can continue to make new claims for tax credits.
At the moment, you would only need to claim Universal Credit instead of tax credits if:
- You start living with a partner who already receives Universal Credit
- You live in one of the areas where Universal Credit is being introduced and you lose your job
You can’t claim tax credits and Universal Credit at the same time. If you’re affected by Universal Credit, the Tax Credit Office will tell you what you need to do to close your Working Tax Credit claim.