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Don’t spend your Christmas holidays stressed about your tax return deadline next month, contact us and let us do all the work.
Tax credits- an introduction
Tax credits are formally defines as ‘a sum that can be offset against a tax liability.’ There are two types of tax credits- child tax credits and working tax credits. You can be eligible for one, or both of them depending on your circumstances.
Please not that you can’t claim tax credits and Universal Credit at the same time
Child Tax Credit
You can receive Child Tax Credit for each child your responsible for, providing that they’re under the age 16 or under 20 and in eligible education or training.
You can claim the credit whether you are in work or not.
Child tax credit can earn you a basic amount of up to £545 per year. This is referred to as ‘family element’.
You can receive extra elements on top of family element, depending on factors like your income and circumstances, e.g. if your child is disabled.
The credit is paid to through the account (i.e. bank account) of the person mainly responsible for the child. The payments occur every week or every four weeks from the date of your claim up to the end of the tax year (5 April), unless your circumstances change.
There is no set limit for income because it depends on your partners circumstances, as well as your own.
Your tax credit can go up or down due to family or work life change- such as changing job.
You are regarded as responsible for a child if:
· They live with you all of the time
· They normally live with you and you’re the main carer
· They keep their toys and clothes at your home
· You pay for their meals and give them pocket money
· They live in an EEA country or Switzerland but are financially dependant on you
To claim child tax credit you can use the HMRC’s online application tool or call the Tax Credits Office.
Working Tax Credit
You are entitled to Working Tax Credit if you’re aged from 16 to 24 and have a child or qualifying disability, or if you’re 25 and over.
To receive the credit you must work a certain number of hours a week, get paid for the work you do and have an income below a set level.
The basic amount of Working Tax Credit is up to £1,960- you can receive more or less depending on certain factors such as your income and circumstances.
How much you receive depends on different ‘elements’, see below
Your eligibility can depend on your age and how many hours of paid work you do a week. Your income and other circumstances can also affect how much you get.
If you do not have children or a disability you must be 25 or over to be eligible.