The information in this article is only relevant if you have an existing Working Tax Credit (WTC) claim. Unless very limited circumstances apply any new claims for WTC will be a claim for Universal Credit instead.
Working Tax Credit (WTC) provides extra help if you work and you are on a low income. It is administered by the Revenue (HMRC), and claims must be made as a couple if you live with a partner, or on your own if you are a single parent. You claim WTC with Child Tax Credit (CTC) if you are eligible for both. To get WTC, you need to be working either 16, 24 or 30 hours a week. You must work at least 16 hours a week if you are:
- A lone parent responsible for a child or young person.
- A couple with children and your partner receives certain benefits or national insurance credits for sickness or disability for example, Employment and Support Allowance, Disability Living Allowance or Personal Independence Payment
- A couple with children and your partner is entitled to Carer’s Allowance
- A couple with children and your partner is in hospital or in prison.
- Someone with a disability which puts them at a disadvantage in getting a job
- Aged 60 or over.
If you are part of a couple with children and your partner is not sick or disabled or entitled to Carer’s Allowance, you will need to work 24 hours a week between you (unless your partner is in hospital or in prison). One of you must work at least 16 hours a week. The other eight hours can be worked by either you or your partner, or be shared between you. If you are 25 or over and work more than 30 hours a week, you may also be eligible even if you do not have children and are not disabled. Whether or not you receive any WTC will also depend on your income. You use the benefits calculator on the Turn2Us website to work out if you are eligible. See How your tax credits are worked out for more information.
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 are:
- In the first 39 weeks of Maternity Leave or Adoption Leave.
- On Paternity Leave
- On Shared Parental Leave during a period when Statutory Shared Parental Pay is paid, or would be paid if the conditions were met.
- Being paid Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay or Maternity Allowance.
- Being paid Statutory Sick Pay.
- Being paid Employment and Support Allowance, or receiving National Insurance Credits due to being incapable of work or having limited capability for work, for up to 28 weeks after being in work.
- On strike for up to ten consecutive days.
- Suspended from work while complaints against you are being investigated
- Not working but were in work within the past seven days, for example, because you are on jury service or because you have a short break between jobs
- Not working 16/24/30 hours a week but stopped, or your hours reduced below these levels, within the last four weeks.
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 also seems as if HMRC will treat you as working if you normally work enough hours, but you are not currently doing so due to the coronavirus. There is more information about tax credits if you are temporarily absent from work on the HMRC website.
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 (WTC), 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 WTC during the weeks when you work more hours. You can contact the Revenue (HMRC) for advice. If they decide you are not entitled and you disagree, you can ask for a reconsideration and if necessary appeal. You are allowed to average out your childcare costs, and this can be a good idea if you have school age children. If you pay childcare costs all year round but they vary in school holidays, you can work out an average based on a year of paying childcare costs. If you only pay childcare costs at certain fixed times of year, you can choose to report the average over these fixed periods and be paid extra tax credits only when you have these costs. Alternatively, you can report what you actually pay, when you pay it, but this may mean you lose out over the school year as some changes cannot be taken into account. For more information about averaging hours or childcare costs, look on the HMRC website or call the Tax Credit helpline.
If you have further questions and would like to contact our advice team please use our advice contact form below or call us.