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Home Advice for Parents & CarersBenefits A-Z Tax Credits: Child Tax Credit and Working Tax Credit

Tax Credits: Child Tax Credit and Working Tax Credit

Last updated: 15 Dec 2021
Tax Credits have been abolished and replaced with Universal Credit . This means you can no longer make a new claim for Tax Credits and will be told to claim Universal Credit instead. However, you can add Working Tax Credit to an existing Child Tax Credit claim and vice versa. The rest of this article is only relevant if you have an existing Tax Credit claim.

There are two Tax Credits: Child Tax Credit and Working Tax Credit. They are both based on your income, and worked out in one calculation. If you live with a partner you must claim jointly and both your incomes are taken into account. If you have an existing Tax Credits claim and move in with a new partner or split up with a partner your Tax Credits claim will stop and you will have to claim Universal Credit instead. See our page on changes of circumstances on Tax Credits for more information.

You may qualify for just Child Tax Credit, just Working Tax Credit, both together, or neither, but both use the same form and an application for one is an application for both. This means you can add Working Tax Credit to an existing Child Tax Credit claim and vice versa.

There is lots more information about tax credits on the GOV.UK  website.

Child Tax Credit

Who can claim Child Tax Credit?

Child Tax Credit is available to people on a low income who are:

  • Responsible for a child under 16.
  • Responsible for a young person under 20 in certain types of education or training.

You don’t have to be the legal or biological parent to get Child Tax Credit. There are special rules if you are claiming for a third or subsequent child born on or after 6 April 2017.

You can get Child Tax Credit for a young person aged 16 to 19 if:

  • The young person is in full-time non-advanced education (this includes education up to and including A levels, NVQ/SVQs at Level 3, Highers and equivalent.
  • Or the young person is doing approved training (for example, foundation learning).

You cannot get Child Tax Credit if the young person is receiving education or training as part of their employment. If the young person is 19, you can only get Child Tax Credit for them if they started the education or training, or were enrolled or accepted to start it, before they reached their 19th birthday.

Can I add a new baby onto my existing claim?

If you are already getting Tax Credits you can add a new baby to your claim, but you won’t normally get any Child Tax Credit for a third or subsequent child born on or after 6 April 2017. You will still be able to claim any disability element for a third or subsequent child. You can also get the childcare element of Working Tax Credit for any number of children, but the maximum amount of help doesn’t change if you have two children in childcare or more than two. You can find more information on our page about Tax Credits if you have more than two children.

How much is Child Tax Credit?

Child Tax Credit depends on how many children you have. You can get more Child Tax Credit if you are claiming for children on Disability Living Allowance (DLA) or Personal Independence Payment (PIP). You can find out more about those benefits here. Your Child Tax Credit will also depend on your income.

If you have a third or subsequent child  born on or after 6 April 2017, you won’t get any extra Child Tax Credit for that child (with very limited exceptions).  You will still be able to claim any disability element for a third or subsequent child, and the childcare element of Working Tax Credit isn’t affected by the two child limit.

Whether or not you receive any Child Tax Credit will also depend on your income.

Your Tax Credit award is worked out by calculating a maximum possible award for your circumstances, made up of all the elements you are eligible for. Your income (based on either the previous tax year or an estimate of the current tax year) is then worked out and the maximum is reduced to give the amount you are entitled to receive. You can find more information on how Tax Credits are worked out from the Low Incomes Tax Reform Group.

You can use a benefits calculator to work out if you are eligible (but remember you can only get Child Tax Credit if you are already claiming Tax Credits, see above). 

Working Tax Credit

How many hours you need to work for Working Tax Credit?

Working Tax Credit provides extra help if you work and you are on a low income. To get Working Tax Credit, you need to be working either 16, 24 or 30 hours a week.

CircumstancesHours a week
Aged 25 to 59At least 30 hours
Aged 60 or overAt least 16 hours
DisabledAt least 16 hours
Single with 1 or more childrenAt least 16 hours
Couple with 1 or more children Usually, at least 24 hours between you (with one of you working at least 16 hours)

If you are a couple with children you only need to work 16 hours a week if:

Whether or not you receive any Working Tax Credit will also depend on your income.

Your Tax Credit award is worked out by calculating a maximum possible award for your circumstances, made up of all the elements you are eligible for. Your income (based on either the previous tax year or an estimate of the current tax year) is then worked out and the maximum is reduced to give the amount you are entitled to receive. You can find more information on how Tax Credits are worked out from the Low Incomes Tax Reform Group.

You can use a benefits calculator to work out if you are eligible (but remember you can only get Working Tax Credit if you are already claiming Tax Credits, see above). 

Treated as working for Working Tax Credit

There are several circumstances when you will be treated as being “in work” even though you are not actually working. Although you may be absent from work, you will be treated as being in work if you were working immediately beforehand and you are:

In all these cases, you will be treated as working the same number of hours as you were immediately before you stopped work or reduced your hours. It’s important to tell HMRC if you get any statutory payments or Maternity Allowance in relation to time off work as a parent. That is because not all of this money will be taken into account for Tax Credits.

Working out your hours for Working Tax Credit

If you do a predictable pattern of working such as two weeks on, two weeks off, then you can report your average hours in your Tax Credits claim. If you have a pattern of term-time working only, Tax Credits can ignore the periods when you do not work. So, for example, if you have children and work 16 hours a week during term time you may qualify for Working Tax Credit, depending on your income.

If you do not have a predictable pattern of work, you have to think about what hours you ‘normally’ work over a representative period. But if your work varies a lot and you often work less than the number of hours needed, you may find that you only qualify for Working Tax Credit during the weeks when you work more hours. You can contact HMRC for advice. If they decide you are not entitled and you disagree, you can ask for a reconsideration and if necessary appeal.

Childcare costs and Working Tax Credit

You can get help with up to 70% of your childcare costs through the childcare element of Working Tax Credit, however, you must meet work conditions to get it. If you live with a partner, the work conditions affect them too and are slightly different to the conditions for Working Tax Credit itself. See our page on help with childcare costs on Working Tax Credit for more information.

 

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The information on the law contained on this site is provided free of charge and does not, and is not intended to, amount to legal advice to any person on a specific case or matter. If you are not a solicitor, you are advised to obtain specific legal advice about your case or matter and not to rely solely on this information. Law and guidance is changing regularly in this area.