The majority of people who claim state benefits in the UK are in work. While some working claimants can claim Universal Credit, those who receive Child Tax Credit can also claim Working Tax Credit.
We are going to look at Working Tax Credit, find out what it is, who can claim it, and how much it is worth.
Working Tax Credit is a state benefit for people who are in work but on a low income and already receive Child Tax Credit (which is different from Child Benefit). The exact amount you receive is dependent on your circumstances.
Working Tax Credit is primarily for families. As with other state benefits, the payments reduce as the household income rises until the income reaches a threshold at which the benefits stop completely. The level of this threshold is dependent on specific circumstances.
To qualify for Working Tax Credit, you must work a certain number of hours per week. If you do not meet the prerequisites for the benefit, you can apply for Universal Credit instead.
Both Working Tax Credit and Child Tax Credit are being slowly phased out and replaced by Universal Credit. However, you can still claim both as long as you already receive the other.
You can now only make a new claim for Working Tax Credit if you already claim Child Tax Credit. If you are not eligible for Working Tax Credit, you can apply for Universal Credit instead.
If you receive Child Tax Credits and want to apply for Working Tax Credit, you must also work a certain number of hours per week to qualify. The current working requirements are:
|Age/circumstance||Minimum hours of work a week|
|Aged 25 to 59||30 hours|
|Aged 60 or over||16 hours|
|Single with one or more children||16 hours|
|Couple with 1 or more children||24 hours between you (with one working at least 16 hours).Or, you work at least 16 hours a week, and you’re disabled or aged 60 or above.Or, you work at least 16 hours a week, and your partner is incapacitated, is entitled to Carer’s Allowance, or is in hospital or prison.|
A child is legally defined as someone under the age of 16 or under 20 if they are in education or training. You are considered responsible for a child if they live with you, or they usually live with you, and you are their main carer.
If you are over the State Pension age (65), you cannot apply for Working Tax Credit. However, you can apply for Pension Credit, which is designed to help people aged 65 and over who are still in low-income work.
To qualify for Working Tax Credit, your work must be paid and last for at least four weeks.
Paid work does not include:
- money made from a ‘Rent a Room’ scheme
- for work done while in prison
- as a grant for training or studying
When you apply for Working Tax Credit, you need to report any additional income you receive from the following sources:
- money earned through employment and self-employment
- taxable social security benefits
- student dependent grant
You only have to report other income sources if you earn more than £300 a year from them.
The basic amount someone can get is £2,070 per year, which is known as your basic element. This could then be topped up further depending on your personal 'elements' (circumstances). For example, there is a disability element and a lone parent element.
The below table by GOV.UK shows how much you can expect to be awarded for Working Tax Credits.
|You’re a couple applying together||Up to £2,125 a year|
|You’re a single parent||Up to £2,125 a year|
|You work at least 30 hours a week||Up to £860 a year|
|You have a disability||Up to £3,345 a year|
|You have a severe disability||Up to £1,445 a year (usually on top of the disability payment)|
|You pay for approved childcare that takes place in person (not online)||Up to £122.50 (1 child) or £210 (2 or more children) a week|
Any Working Tax Credits due to you are paid every week or every four weeks. Payments are made directly to your building society or bank account, and a joint claim must only use one account.
You are normally paid from the date of your claim.
Your Working Tax Credit is paid directly into your bank account either every week or every four weeks; you can choose.
If you are a couple, you must pick one of your accounts as it cannot be split between two.
It can be harder to get Working Tax Credit if you are a self-employed person. This is because further stipulations need to be met to receive Working Tax Credits. For example, your business must be profit-driven, and it must be commercial, regular, and organised. You may be denied Working Tax Credits if you do not:
- Make any profit and/or do not plan to make any
- Maintain regular work
- Keep receipts, invoices, and other business records
- Maintain the correct business regulations such as licenses and insurance.
In the event you earn less than the national minimum wage, you may be asked to contact HMRC with further information. This includes:
- Business Records
- Your companies business plan
- Details explaining how your business is run from day to day
- Evidence that you have promoted your business. This includes marketing materials such as flyers or posters.
There are also further benefits and expenses you can claim if you are self-employed.
There are a number of conditions that need to be met, or that can limit your Working Tax Credit entitlement. You must have been in paid work or expect to be in paid work for at least four weeks. This work can also include payment in kind. For example, a farm labourer that works in exchange for produce.
You may also receive money for other things that do not qualify as paid work. This includes:
- Less than £7,500 or £3,750 (joint owners) earned as part of the Rent a Room scheme
- Any money earned whilst working in prison
- Training or studying grants
- A sports award
There is no set cap on how much income you can earn when receiving Working Tax Credit. This is because Working Tax Credits are assessed on your or you and your partner's personal circumstances.
The amount of Working Tax Credit you receive can go up or down depending on your life circumstances.
You should inform HMRC as soon as possible if any of the following circumstances change:
- You get married or divorced, or you move in with a new partner.
- Have a change in income.
- Have a baby.
- Start or stop claiming other benefits.
- Start or stop having a disability or illness that affects your ability to work.
- A child or partner dies.
- A child stops going to childcare for four weeks or more.
- Your childcare costs stop or go down by £10 or more per week.
- A child leaves home or is taken into custody.
- A child aged 16 or over finishes or leaves full-time education.
- Your working hours fall below 30 hours a week.
You should also tell HMRC straight away if you:
- Go abroad for eight weeks or more.
- Leave the UK permanently.
- Start working for less than 16 hours while claiming childcare costs.
- Have been on strike for more than ten consecutive days
You must report any changes to your circumstances to HMRC within one month of them happening. Failure to report changes or knowingly reporting changes incorrectly can result in a fine.
If you do not report certain changes within the one-month period, you can be fined up to £300. And you can be charged up to £3,000 if you give the wrong information.
As we saw earlier, you can only claim Working Tax Credit if you already receive Child Tax Credit.
If you already get Child Tax Credit, you need to update your existing tax credit claim on your HMRC account. You can do this by reporting a change in your circumstances.
If you don't receive Child Tax Credit, you cannot claim Working Tax Credit. You can apply for Universal Credit instead.
If you are in an employment gap, you can get Working Tax Credit for certain periods of time. Your employment gap may be due to:
- being on maternity leave
- getting sick pay
- being in between jobs
You must expect to return to work at the end of the gap. If you don't return to work, you should contact HMRC.
You can get Working Tax Credits during employment gaps in the following circumstances:
|Circumstance||Claim tax credits up to...|
|Lose or leave your job||Four weeks|
|Maternity leave||The first 39 weeks of your leave|
|Adoption leave||The first 39 weeks of your leave|
|Paternity leave||The period of your ordinary paternity leave|
|Additional paternity leave||The equivalent 39th week of your partner’s leave|
|Sick leave||The first 28 weeks|
|Strike||The first ten days|
|Laid off work||Four weeks after you’re laid off, or the layoff becomes indefinite|
|Suspended from work||The period of suspension|
Working Tax Credit is a UK state benefit designed for people who are in work. Although it is being phased out, you can still make claims for it as long as you already claim Child Tax Credit.
The exact amount you receive in Working Tax Credit is dependent on your circumstances. If any of your circumstances change while you claim Working Tax Credit, you must inform HMRC immediately to avoid paying a fine.