The Working Families’ Tax Credit and the Children’s Tax Credit was replaced by the Working Tax Credit and the Child Tax Credit. We’ve deciphered the small print, so read on to find out how this change affects your benefits and entitlements.
The Working Tax Credit is available to people who are in paid work, regardless of whether they are single, married or have children. The Child Tax Credit is for families with at least one child. According to the Inland Revenue, nine out of ten families will qualify.
In order to receive either credit you need to apply using form TC600 (available by telephoning 0845 300 3900 in Great Britain or 0845 603 2000 in Northern Ireland). Alternatively you can complete the form online by visiting www.inlandrevenue.gov.uk.
You may be eligible to apply for one or both tax credits – see below for more information.
Who can apply?
In order to be eligible for either tax credit you must:
- be aged 16 or over
- live in the UK, although some people who do not live in the UK may qualify – see www.inlandrevenue.gov.uk for more information.
Child Tax Credit
The Child Tax Credit is paid direct to the person who is mainly responsible for looking after a child or children. This is usually the mother. Tax credits are no longer paid to employees through company payrolls.
The Child Tax Credit is made up of two elements. First, a family element that is payable to any family with responsibility for a child. If a family has a child under the age of one, it will receive a higher rate, known as the baby element. Second, a child element for each child that you are responsible for. If a child is disabled this is paid at a higher rate.
Working Tax Credit
You are entitled to the Working Tax Credit if you are employed or self-employed and:
- are paid for working 16 hours or more per week
- expect to work for at least another four weeks.
In addition you should:
- be aged 16 or over and have responsibility for at least one child, or
- be aged 16 or over and be disabled, or
- be aged 25 or over and work at least 30 hours a week.
If you are part of a couple, only one of you can receive the Working Tax Credit. This will be the person who is working 16 hours or more a week.
The Working Tax Credit is made up of various elements:
- a basic adult element
- an extra element which is paid to single parents and couples
- an extra element if you or your partner work 30 hours or more a week
- an extra element if you or your partner are disabled – there is an
- additional element if this disability is severe
- a childcare element if you have to spend money on childcare.
Working Tax Changes – April 2011
With several changes being announced in the Government’s spending review that come into effect in April, include:
- reduction of the childcare costs that parents can claim through the childcare element of the Working Tax Credit (WTC) from 80 per cent to its previous 70 per cent level in April 2011
- changing the eligibility rules so that couples with children must work 24 hours a week between them, with one partner working at least 16 hours a week in order to qualify for the WTC
- freezing the basic and 30 hour elements of the WTC for three years from 2011-12
- increasing the child element above indexation by £30 in 2011-12 and £50 in 2012-13
- removing the baby element of tax credits from 6 April. Families with one higher rate tax payer will lose child benefit, whilst the benefit will be frozen for three years for everyone else.
How much is the Tax Credit worth?
The amount of tax credit you will get will depend on your annual income and will be based on your income for the year. Higher earners will receive less than those with more moderate salaries.
Further information
Call the Tax Credits helpline on 0845 609 5000
Child Benefit Centre
tel: 08701 555540 text phone 0191 2251833
Child Support Agency
tel: 08457 133 133
Family Credit Helpline 01253 500050
