Tax credits refer to state benefits that are purposely established to provide extra income to families who are taking care of children, disabled workers or anyone on low income.
Tax credits are offered in two types; working tax credits or child tax credits. Anyone who is eligible for both can apply depending on their current circumstances. You can call the Tax Credits number 0843 455 0127 for more information on how you can claim both.
Tax credits are means-tested government benefits. This means that eligibility is dependent on prevailing circumstances. The tax credits officer does not look at your savings or National Insurance contributions to determine whether you qualify for tax credits; only your circumstances qualify you. Tax credits are tax free – you are not required to pay any taxes on the amounts you receive. If you need to file a claim, contact HMRC.
How Tax Credit Awards Are Calculated
Your award is based on your current circumstances. In this case, you will be awarded an amount depending on your income from the previous year. If, for instance, your income had reduced, you can request HMRC to revise your award based on your estimate of your future income.
However, be careful not to underestimate your income since you may be forced to pay back any extra amount you get in awards. You can call the Tax Credits number 0843 455 0127 for more information on how to appropriately fill up the claim form.
Child Tax Credits
Child tax credits are given to individuals or couples to help with the costs of raising children. Anyone who is 16 years or older, and is responsible for a child, can apply for CTC. The children who are eligible for tax credits should be under 16 years or up to 20 years of age and in proven full-time training or education.
How Much Is Awarded In Child Tax Credits
The following are the rates for 2017/18 tax year. Note that the rates may change so be sure to stay up to date with the current HMRC rates.
- For a normal child, the annual award is a maximum £2,780 (the basic child award)
- For a disabled child, the annual award is a maximum of £3,175 over and above the basic child award (basic disabled child award)
- For a severely disabled child, the annual award is a maximum of £1,290 over and above the basic child and disabled child awards)
Since this is a means tested benefit, the amount awarded will depend on several factors, top on the list being:
- The number of children in that household
- The condition of the child (whether living with a disability)
- The annual household income
Are There Income Limits for Child Tax Credits
There are some limits to the awards a household can get based on the household income (both parents income). We will look at the upper limits of income beyond which one may not qualify for child tax credits.
- Families with child care costs, the maximum annual household income should be £40,000 for one child, £55,000 for two children and £65,000 for three or more children
- Families without child care costs, the maximum annual household income should be £25,000 for one child, £35,000 for two children and £40,000 for three or more children
If the annual household income is less or equal to £16,105, the award is a maximum of the amount given for that category. This amount is referred to as the income threshold. Any income above this threshold calls for a reduction in the amount awards at the rate of 41p for each extra £1 in income. You can call the Tax Credits number 0843 455 0127 if you need further advice.
How to Claim and Update Your Child Tax Credits
To file a child tax credit, call Tax Credits office or go to the official HMRC website for more information.
Keep in mind that this is an annual award. As such, it needs to be renewed annually by calling the Tax Credits number 0843 455 0127 or via HMRC. It is also important to note that you will be required to communicate all changes that alter your circumstances. This could be a change in income or expenses. This communication should reach your tax credits officer as soon as is practical.
Working Tax credits
These are government benefits given to people who are working to compensate their low income, and are available to self-employed and employed workers.
The basic working tax credit award is £1,960 annually, and could be accompanied by other awards depending on your circumstances. These circumstances include having a disability or child care costs.
Working Tax Credit and Universal Credit are mutually exclusive; you cannot have both at the same time.
Eligibility for Working Tax Credit
Working tax credits are only in effect where Universal Credit isn’t. As such, the eligibility criterion for WTC is as follows;
- You do not live in an area were Universal Credit is in effect
- Either partner in the household qualifies for Pension Credit
- You have child care costs and/or disability and are aged between 16 and 24 years
- You are over 25 years and above and work the set minimum working hours
Let us look at this set minimum working hours.
- Everyone who is 25 years to 59 years old should be working a minimum of 30 hours a week
- Anyone who is 60+ years old, or is disabled or is a lone parent should work a minimum of 16 hours weekly
- A couple with children must work at least 24 hours between them, with one partner working at least 16hours a week
There are some exceptions to this rule are;
- Anyone who living with a disability or is past the state pension age should work for a minimum of 16 hours a week
- If a partner receives Carer’s allowance, is in prison or hospital, or has a disability or ill health, you should work a minimum of 16 hours a week
Annual Income Limits
Since working tax credits are based on the prevailing circumstances, your income (and that of your partner) will be a deciding factor on the amount of award you receive.
Any household with an annual income of £6,420 and below will get the maximum amount payable for each category qualified for. This is the income threshold; any additional income over this amount will reduce the amount payable in tax credits. This threshold also differs depending on circumstances such as disability and child care costs.
The Maximum Amount Payable in Working Tax Credits
Here are the current rates (tax year 2017/18). Be sure to stay updated accordingly.
|Element||Maximum Annual Award|
|Lone parent or a couple applying jointly||£2,010|
|When working minimum of 30 hours a week||£810|
|If working and are living with a disability||£3,000|
|If living with a severe disability||£1,290|
|If required to pay approved or registered child care||70% of the child care costs|
If you qualify for both working tax credits and child tax credits, you can be awarded without having to make separate claims. If you have any queries concerning awards, call Tax Credits number 0843 455 0127 today.