Working Tax Credit was designed to help people who are in work but have a low income. This is paid by HM Revenue and Customs. However, as part of the Welfare Reform Act 2012, the government aimed to replace the six 'legacy benefits.' This included:

  • Child Tax Credit
  • Housing Benefit
  • Income-related employment and support allowance
  • Income-based jobseeker's allowance
  • Income Support
  • Working Tax Credit

Universal Credit was introduced to replace these benefits. Since the introduction of Universal Credit, Working Tax Credit and other benefits have been gradually phased out. You can no longer claim Working Tax Credit unless you are already claiming Child Tax Credit. Other than this, any existing tax credit claim will change to Universal Credit if any circumstances change. Other than the above exception a working tax credits claim will not be possible. Instead, Universal Credit will be used to help prop up low incomes.

Unsurprisingly the cumulative effects of Covid - 19 restrictions meant a record level of people claimed Universal Credit in March 2021. Six million people would claim UC in that time. Government statistics show that around 2.3 million people are claiming Universal Credit whilst employed.

This shows that claiming benefits whilst working is a safety net for millions. This article will show the current eligibility criteria for Working Tax Credit and explore the benefit that has replaced it.

As stated, you can only receive Working Tax Credit if you are already claiming Child Tax Credits. However, there are other stipulations. You have to work a certain number of hours depending on your age, and disability status, to qualify for Working Tax Credit. For example:

CircumstanceHours 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 childrenUsually, at least 24 hours between you (with 1 of you working at least 16 hours)

As you can see a young person under the age of 25 cannot claim Working Tax Credit. Most people will have to have at least 30 working hours a week to qualify. However, a lone parent, disabled person, or someone above 60, will only need to work 16 hours a week. A couple with children will have to work 24 working hours combined, with one person working at least 16 hours.

The government defines a child as someone under 16 or someone under 20 in approved education or training. Furthermore, if you are on leave, you can still claim Working Tax Credit. This includes being on maternity leave and when receiving sick pay.

There are also some exceptions to the number of hours required for a two-parent joint claim. There is a disability element to this, affecting how many weekly hours you need to work. For example, if you are disabled, you only need to work 16 hours a week. If your partner is incapacitated, you only need to work 16 hours a week, as well as if you are 60 or over.

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 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 togetherUp to £2,125 a year
You’re a single parentUp to £2,125 a year
You work at least 30 hours a weekUp to £860 a year
You have a disabilityUp to £3,345 a year
You have a severe disabilityUp 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.

The Universal Credit system was introduced by the Coalition Government of the Conservatives and the Liberal Democrats. This was the brainchild of Iain Duncan Smith. There were a number of reasons this was introduced to replace 'legacy benefits'. The belief was that it would inspire more able people to start working rather than living off benefits. It also aimed to simplify and streamline the benefits system, making it easier for claimants and handlers to manage. This would also cut down on fraud and errors.

However, UC has been controversial since its introduction. This is because many that claim Universal Credit receive less than what they previously got for other benefits. Due to the pandemic, the government introduced an uplift to support claimants. This was initially a 12-month uplift of £20 per week, which was then extended by a further six months, with a further one-off payment of £500. This uplift has now been scrapped.

As it stands, if you make a new claim for what was previously Working Tax Credits, you have to instead apply for UC. Except for the circumstances previously explained. This can be done online, and payments are made monthly or every two weeks in some cases in Scotland.

To make an application, you will need to provide a number of details. For example:

  • Bank details or building society or credit union details
  • Your email address
  • Your telephone number
  • ID documents such as; driving license, passport, bank card, a payslip, or a P60
  • Housing information such as rent costs
  • Your earnings
  • Information about any disabilities
  • Child care cost, if applicable
  • Savings and investment information

If you need any help claiming Universal Credit, you can phone the UC helpline:

0800 328 5644, or you can use the Citizens Advice, Help to Claim Service. Citizens Advice England and Wales. Citizens Advice Scotland.

The Welfare Reform Act 2012 has largely replaced many benefits - streamlining them into one. This meant that Working Tax Credits have all but been replaced as the government is phasing them out. However, you can still claim Working Tax Credits if you are already claiming Child Tax Credits. Working Tax Credit was intended to help people in work but who are earning a low income.

You will get a basic rate of £2,070 for Working Tax Credit. From there, credit can be topped up for extra elements such as a childcare element or a disability element. Eligibility is based on a number of things, such as how many contracted hours you work per week. Your marital, parental, and disability status and age are also taken into account. There is no maximum income you can make preventing you from making a claim. When you make a new claim, it is assessed by your personal circumstances.

However, Universal Credit is now replacing the previous system. Any new claim can be made online.