Working Tax Credit is designed to top up your earnings if you work and you’re on a low income. It is one of the benefits being replaced by Universal Credit. 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.
- Universal Credit and Working Tax Credit
- What is Working Tax Credit?
- Do I qualify for Working Tax Credit?
- How much is Working Tax Credit?
- Working Tax Credit and help with childcare costs
- Leave, sickness and gaps in your employment
- How to claim Working Tax Credit
- Keeping your tax credits up to date
- Tax credits and income changes
- Other tax credits you might qualify for
Universal Credit and Working Tax Credit
Most people will not be able to make a new claim for Working Tax Credit and will be asked to apply for Universal Credit.
If you’re already claiming Working Tax Credit, you will have to move to Universal Credit before March 2023. How and when you move depends on if you have to make a new claim because of a change in circumstances, or are asked to claim Universal Credit by the Department for Work and Pensions (DWP).
Tax credits and a change in circumstances
You must tell the Tax Credit Office within 30 days if you have a change of circumstances, such as:
- losing a job
- having a child
- start working less than 16 hours a week.
This might mean you will have to make a new claim for Universal Credit. The Tax Credit Office will tell you what you need to do.
Call the Tax Credit Helpline on 0345 300 3900 to let them know about any changes to your circumstances.
What is Working Tax Credit?
Help to Save
If you’re on Working Tax Credit, check out the Help to Save account which gives you up to a 50% bonus from the government on your savings.
Working Tax Credit is designed to top up your earnings if you work and you’re on a low income.
If you’re eligible, you can get it if you’re employed or self-employed.
You will get a basic element of £1,960 a year plus extra elements, depending on your circumstances, such as having a disability or paying for childcare.
You can’t claim Working Tax Credit if you already get Universal Credit.
Do I qualify for Working Tax Credit?
You can usually only make a new claim for Working Tax Credit if:
- you have three or more children
- you or your partner qualify for Pension 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 |
| Aged 60+ | 16 |
| Disabled | 16 |
| 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) |
Exceptions for couples with at least one child
You can claim if you work less than 24 hours a week between you and one of the following applies:
- you work at least 16 hours a week and you’re disabled or aged 60 or above
- you work at least 16 hours a week and your partner is getting certain benefits because of disability or ill health, is entitled to Carer’s Allowance, or is in hospital or prison.
Annual household income limits
Tax credits are tax-free and you don’t have to be paying National Insurance or tax to qualify.
When you apply, the Tax Credit Office will take into account your circumstances (and those of your partner or spouse) when deciding how much you’re entitled to.
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 this will reduce the amount you can get.
If you or your partner earns over a certain amount, you won’t be entitled to Working Tax Credit. This is called the annual household income limit.
The table below gives you a rough idea of the income limits for getting Working Tax Credit if you:
- are over 25
- don’t have a disability
- don’t have any children.
| Number of children | Annual household income limit for 2018-19 |
|---|---|
| None - single person | Around £13,100 |
| None - couple | around £18,000 |
There are different income limits depending on your circumstances, for example, if you or your partner have a disability, or you have children.
You can see the full entitlement tables for tax credits at GOV.UK.
If you have dependent children, your annual household income limits might be higher and you might be entitled to Child Tax Credit.
How much is Working Tax Credit?
Use GOV.UK’s Tax credits calculator to work out an estimate of how much you could get.
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 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.
The rates for the 2018 to 2019 tax year
| Element | Yearly amount |
|---|---|
| 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 £3,090 |
| If you’re severely disabled (the ‘severe disability element’) | Up to £1,330 |
| If you’re paying for registered or approved childcare (the ‘childcare element’) | Up to 70% of your childcare costs |
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, up to certain maximum weekly limits.
The table below shows how much you could get in the 2018-19 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 will still only receive the maximum amount shown above.
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.
Leave, sickness and gaps in your employment
If you’re eligible, you can get Working Tax Credit for periods when you’re not working. For example, if you’re sick, on maternity leave or you’ve lost your job.
Depending on the circumstances, you can claim Working Tax Credit for a set period of time, if you qualify.
To qualify, you must:
- have been in paid work
- have worked the right number of hours before you went on leave or the gap happened
- have got Statutory Sick Pay or an equivalent benefit if you were on sick leave.
| Circumstance | Period you get tax credits for |
|---|---|
| You lose or leave your job | 4 weeks |
| You’re on maternity leave or adoption leave | The first 39 weeks of your leave |
| You’re on paternity leave | The period of your ordinary paternity leave |
| You’re on additional paternity leave | Up to the equivalent 39th week of your partner’s leave |
| You’re off sick | The first 28 weeks |
| You’re on strike | The first 10 days |
| You’re laid off work | 4 weeks |
| You’re suspended from work - for example, because of a complaint | Usually the period of the suspension |
If you don’t return to work at the end of this time off, call the Tax Credits Helpline on 0345 300 3900 and let them know.
How to claim Working Tax Credit
Call the Tax Credits Helpline:
- Telephone: 0345 300 3900
- Textphone: 0345 300 3909
- Outside UK: +44 2890 538 192
- Opening times: 8am to 8pm, Monday to Friday, 8am to 4pm Saturday, 9am to 5pm Sunday
- Find out about call charges
If you’re already claiming tax credits, call the Tax Credit Helpline to update your claim.
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 get, or mean you have to make a new claim for Universal Credit.
Tax credits and income changes
Important
A significant income change might count as a change in circumstances, which would mean you will have to make a new claim for Universal Credit instead of tax credits.
The amount by which your income can change before you have to tell the Tax Credit Office is £2,500. This is called the income disregard.
If your income goes up
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 might find you have been overpaid tax credits.
You’ll 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.
If your income goes down
If your income falls by £2,500 or more, you might be entitled to more tax credits, or be asked to claim Universal Credit.
Tell the Tax Credit Office as soon as possible about your change of circumstances.
If you are overpaid 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,
Other tax credits you might qualify for
Important
Child Tax Credit is also being replaced by Universal Credit
If you qualify for Working Tax Credit, have children and are 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.
This article is provided by the Money Advice Service.
