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Tax credits guide | Child Tax Credit | Working Tax Credit

 

Tax credits are available to top-up your income if you are a low earner, disabled or have children. Our updated guide tells you what you need to know.

Who qualifies?

If you are responsible for at least one child or young person who normally lives with you, you may qualify for, for example, the Child Tax Credit.

But you don't need to have children to qualify. For example, if you earn low wages, you could be eligible for the Working Tax Credit.

What are the income limits for getting tax credits?

The total annual income limits that generally apply before your tax credits are reduced or stopped altogether are:

• If you have children it is £41,300• If you're single without children it is £12,900• If you're in a couple without children it is £17,700

These income limits may not apply to you if you have a large family and pay a lot in childcare, or have a disability. The best way to see how much you are entitled to is to go to the HM Revenue & Custom's website and complete the online questionnaire.

If you think you qualify for tax credits, act immediately. Any delay could result in lost payments because tax credits typically can be backdated only up to three months from the date HMRC receives your claim form.

Those who are married or living with a partner are required to make a joint claim for tax credits. Single claims can be made only if you don't have a spouse.

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So which children can I claim for?

HMRC states: 'If you look after any children under the age of 16 - or under 20 if they're in full-time education or approved training - you may be able to claim Child Tax Credit to help with the cost of looking after them.'

You can claim for a child who lives with you, up to August 31 after their 16th birthday. If your child is between 16 and 19, you can still claim tax credits for them if they are still in full-time education, up to and including 'A' levels, NVQ level 3 or Scottish Highers or in an approved training scheme.

If your child is between 16 and 17, and not in full-time education or approved training, you can still claim tax credits for up to 20 weeks if they have signed up with the Careers Service, Connexions Service or Training and Employment Agency.

›› What happens to your tax credits when your child reaches 16?

What about those who have adopted or fostered?

You can claim once you are not getting any money from your local authority or Health and Social Services Board. If you are unsure about your situation, call the Tax Credit helpline on 0845 300 3900.

My child sometimes lives with me and sometimes with my former partner? Can I claim?

In such cases, just one of you can claim. The tax credit is usually paid directly to the person who is the child's main carer.

How much will I receive?

The lower your income, the more tax credit you are likely to receive. Before 6 April 2011, families with an income of up to £50,000 a year could qualify for help. The upper limit is now £40,000. This means if your income exceeds £40,000, your basic child tax credit payment of £545 will be reduced.

There have also been changes to some of the rates - also known as elements - that go to make up the overall payment you can receive. The maximum amount of the child element of child tax credit has risen from £2,300 to £2,555. The couple and lone-parent element rises from £1,890 to £1,950.

›› Tax credit rates and thresholds

What if my income rises?

If during the tax year (April 6 to April 5) your income rises by more than £10,000 you must tell the Revenue & Customs and your payments will be adjusted. This £10,000 figure was £25,000 before 6 April 2011.

Help with childcare costs

From 6 April 2011, the amount of help you can get with your childcare costs drops from 80% to 70%. This means the maximum help you can get through tax credits for your childcare will be:

• £122.50 a week for one child.

• £210 a week for two or more children.

Tax credits for babies under one

The extra amount of child tax credit for having a baby under the age of one stopped from 6 April 2011, regardless of whether your child is still under one year old in the 2011-2012 tax year.

How are payments worked out?

Every year between April and June, HMRC, will write, asking you to check the information it has about your personal circumstances, such as confirming the amount of income you received in the latest tax year. HMRC will then ensure that the payments are made to you, and those due are correct.

But there are a number of other factors to be considered, when calculating how much you should be paid.

These include:

• How many children you have living with you

• Whether you work - and how many hours you work

• If you pay for childcare

• If you or any child living with you has a disability

• If you are aged 50 or more and are coming off benefits

›› The HMRC Tax Credits Calculator will tell how much you could get

How can I make a claim?

You need to complete a claim form. You can get hold of a tax credits claim pack from the Tax Credit Helpline on 0845 300 3900, or textphone 0845 300 3909. The helpline is open from 8am to 8pm seven days a week.

›› Helpful forms and further information

You can fill the form in yourself and send it back by post. If you need any help completing it, contact the Tax Credit Helpline. And if you claim other benefits, such as Income Support, Employment and Support Allowance or

Jobseekers Allowance, your Jobcentre Plus - or in Northern Ireland, a Social Security office - will help you with your tax credits claim form.

What about the over-50s?

If you're 50 or over and starting work again after being on certain benefits, such as Income Support or Jobseeker's Allowance, you may be able to get an extra Working Tax Credit payment – called the '50-plus' element. To qualify, you need to be working for at least 16 hours a week.

If you are aged 60 or over, from 6 April 2011 you can make a claim for Working Tax Credit if you work at least 16 hours a week and you are not already getting tax credits.

›› Over-50s Working Tax Credit

I am disabled, what can I claim?

To be eligible, you must usually work for 16 hours or more a week and you must have a disability that makes it hard for you to get a job and you must be receiving, or have recently received, a qualifying sickness or disability-related benefit. If you're not sure whether you qualify, call the Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909.

With regard to those with severe disabilities, if you and/or your partner, receive the Highest Rate Care Component of Disability Living Allowance or the Higher Rate of Attendance Allowance, you may also qualify for extra tax credit as a result. And for couples, it does not have to be the person with the disability who is working, as long as one of you usually works at least 16 hours each week.

How much could you receive?

In this tax year, ending April 5 2012, alongside the Working Tax Credit you could get £2,650 a year if you are disabled or £3,780 a year if you are severely disabled. But the actual amount will depend on other money you may have coming in.

In addition, you should inform HMRC if you make a claim for a sickness or disability benefit that would mean you get extra tax credits payments. If you are later told that you are entitled to the benefit, your extra tax credits payments will be backdated to the earliest possible date.

›› Further information: The HMRC tax credits site

Updated 6 April, 2011

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