Tax CreditTax Credit

What is it?What is it?

You can apply for two tax credits, Child Tax Credit and You can apply for two tax credits, Child Tax Credit and Working Tax Credit - payable from April 2003 you can claim Working Tax Credit - payable from April 2003 you can claim either one alone or both together if working.either one alone or both together if working.

The general rule is that to qualify for tax credits you must The general rule is that to qualify for tax credits you must be aged 16 or over and usually live in the United Kingdom.be aged 16 or over and usually live in the United Kingdom.

Couples must make a joint tax credits application. If you are Couples must make a joint tax credits application. If you are part of a couple, you cannot decide to apply as a single part of a couple, you cannot decide to apply as a single person.person.

Child Tax Credit is for people who are responsible Child Tax Credit is for people who are responsible for at least one child or qualifying young person. for at least one child or qualifying young person.

Child Tax Credit is paid if you work or not, and is Child Tax Credit is paid if you work or not, and is paid direct to the person who is mainly responsible paid direct to the person who is mainly responsible for caring for the child or children. for caring for the child or children.

If you are a lone parent you will receive the If you are a lone parent you will receive the payment.payment.

Many people have transitionally protected child Many people have transitionally protected child additions within their existing Income Support additions within their existing Income Support claims if claimed pre 2003.claims if claimed pre 2003.

Working Tax Credit is for people who are employed or self-Working Tax Credit is for people who are employed or self-employed (either on their own or in a partnership), who employed (either on their own or in a partnership), who usually work 16 hours or more a week, and expect to work usually work 16 hours or more a week, and expect to work for at least 4 weeks and who are aged 16 or over and you for at least 4 weeks and who are aged 16 or over and you are either:are either:

responsible for at least one child responsible for at least one child

aged 16 or over with no children but who are disabled aged 16 or over with no children but who are disabled

aged 25 or over and usually work at least 30 hours a week aged 25 or over and usually work at least 30 hours a week

over 50 and starting work after claiming certain other over 50 and starting work after claiming certain other benefits for over 26 weeksbenefits for over 26 weeks

As part of Working Tax Credit you may qualify for help As part of Working Tax Credit you may qualify for help towards the costs of childcare. towards the costs of childcare.

If you receive the childcare element of Working Tax Credit, If you receive the childcare element of Working Tax Credit, this will always be paid direct to the person who is mainly this will always be paid direct to the person who is mainly responsible for caring for the child or children, alongside responsible for caring for the child or children, alongside payments of Child Tax Credit.payments of Child Tax Credit.

The amount of Tax Credits you receive will depend on your The amount of Tax Credits you receive will depend on your annual income for the previous tax years, although annual income for the previous tax years, although sometimes it will be beneficial to ask for an in-year award.sometimes it will be beneficial to ask for an in-year award.

The Working Tax Credit calculation add all the elements The Working Tax Credit calculation add all the elements due together?due together?

The basic elementThe basic element

Single, couple or lone parentSingle, couple or lone parent

30 hour element30 hour element

If you or your partner work over 30 hours or if you have If you or your partner work over 30 hours or if you have children and one works at least 16 hours and the total joint children and one works at least 16 hours and the total joint hours add to over 30 hourshours add to over 30 hours

Disability elementDisability element: (Must be the person working): (Must be the person working)

On DLA or AA at any level or Constant Attendance On DLA or AA at any level or Constant Attendance Allownace (CAA) or Mobility Supplement (MS) paid by Allownace (CAA) or Mobility Supplement (MS) paid by Industrial Injuries or War PensionIndustrial Injuries or War Pension

Have paid or been paid in the last 6 months either?Have paid or been paid in the last 6 months either?

Incapacity Benefit (IB) at the long term or short term high Incapacity Benefit (IB) at the long term or short term high raterate

Severe Disablement Allowance (SDA)Severe Disablement Allowance (SDA)

Employment Support Allowance (ESA) and / or a Employment Support Allowance (ESA) and / or a combination of Statutory Sick Pay (SSP) and ESA for at combination of Statutory Sick Pay (SSP) and ESA for at least 28 weeksleast 28 weeks

You have had the disablilty premium included in You have had the disablilty premium included in your Housing Benefit (HB), Council Tax Benefit your Housing Benefit (HB), Council Tax Benefit (CTB), Income Support (IS), Income Based (CTB), Income Support (IS), Income Based Jobseekers Allowance (IBJSA)Jobseekers Allowance (IBJSA)

You had been working but due to sickness you You had been working but due to sickness you have been unable to work for over 20 weeks you have been unable to work for over 20 weeks you then return to work part time or at reduced hours then return to work part time or at reduced hours and this disability is expected to last for 26 weeksand this disability is expected to last for 26 weeks

Severely Disability element:Severely Disability element:

You or your partner receive?You or your partner receive?

The high rate care component of Disability Living The high rate care component of Disability Living Allowance Allowance

The high rate Attendance AllowanceThe high rate Attendance Allowance

50 Plus element: (16 or 30 hours)50 Plus element: (16 or 30 hours)

You get this if you are over 50 and working at least 16 You get this if you are over 50 and working at least 16 hours and either:hours and either:

For the previous 26 weeks you had Income Support, For the previous 26 weeks you had Income Support, Jobseekers Allowance, Incapacity Benefit, Severe Jobseekers Allowance, Incapacity Benefit, Severe Disablement Allowance, Employment Support Disablement Allowance, Employment Support Allowance or your old age Pension & Pension CreditAllowance or your old age Pension & Pension Credit

You had your national insurance credit paid due to signing on or You had your national insurance credit paid due to signing on or sicknesssickness

Time spent previously on Carers Allowance, Bereavement Time spent previously on Carers Allowance, Bereavement Allowance or Widowed Prents Allowance can count towards this Allowance or Widowed Prents Allowance can count towards this 26 week period as long as you have one of the above at the date 26 week period as long as you have one of the above at the date of claim.of claim.

The 50 Plus element is limited to one year.The 50 Plus element is limited to one year.

Child Care Costs:Child Care Costs:

Add any qualifying child care costsAdd any qualifying child care costs

The Child Tax Credit Calaculation add togetherThe Child Tax Credit Calaculation add together

Family elementFamily element

Baby element (Under one)Baby element (Under one)

One child element for each qualifying childOne child element for each qualifying child

One disability element for each qualifying childOne disability element for each qualifying child

One severe disability element for each qualifying One severe disability element for each qualifying childchild

If you or your partner are entitled to Income If you or your partner are entitled to Income Support, Income Based Jobseekers Allowance, Support, Income Based Jobseekers Allowance, Income Related Employment Support Allowance Income Related Employment Support Allowance or Pension Credit you will get the maximum or Pension Credit you will get the maximum Working & / or Child Tax CreditsWorking & / or Child Tax Credits

Otherwise the Working & Child Tax Credits are Otherwise the Working & Child Tax Credits are reduced if your household income and earnings reduced if your household income and earnings are over £6,420 yearly and the Child Tax Credit is are over £6,420 yearly and the Child Tax Credit is reduced if your household income is over £16,190 reduced if your household income is over £16,190 yearly and you are not working.yearly and you are not working.

NOTES:NOTES:

Working Tax Credits continue while on Statutory Working Tax Credits continue while on Statutory Maternity Pay, Statutory Paternity Pay, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay or Matenity Allowance and for an Adoption Pay or Matenity Allowance and for an additional 13 weeks after Maternity or Adoption additional 13 weeks after Maternity or Adoption pay finishespay finishes

Example:Example:

David is single 17 and has DLA David is single 17 and has DLA

low care and works 20 hours low care and works 20 hours

weekly earning £120 weekly.weekly earning £120 weekly.

Calculation:Calculation:

Basic Element £1,920Basic Element £1,920

Disability Element Disability Element £2,570£2,570

Total maximum award £4,490Total maximum award £4,490

Weekly this is £86.35Weekly this is £86.35

Fiona is a single parent with fourFiona is a single parent with four

children aged 4,7,12,17 the 7 year old children aged 4,7,12,17 the 7 year old

has DLA High Care she does not work, has DLA High Care she does not work,

she has Carers Allowance at £53.90 she has Carers Allowance at £53.90

weekly and maintenance at £135.weekly and maintenance at £135.

Calculation:Calculation:

Family element £545Family element £545

4 x Child elements £9,2004 x Child elements £9,200

1 x Disabled child £2,715 1 x Disabled child £2,715

1 x Severe disability 1 x Severe disability £1,095£1,095

Total maximum award £13,555Total maximum award £13,555

Weekly this is £260.68Weekly this is £260.68

As Fiona has under £16,190As Fiona has under £16,190

yearly income she will get the yearly income she will get the

maximum weekly amount paid.maximum weekly amount paid.

Maintenance is fully ignored by Maintenance is fully ignored by

all benefits nowall benefits now

Billy is 57 & his partner Yvonne is 56 Billy is 57 & his partner Yvonne is 56 they have 2 children aged 10 & 14, Bill they have 2 children aged 10 & 14, Bill works 35 hours earning £15,000 yearly works 35 hours earning £15,000 yearly or £288.46 weeklyor £288.46 weekly

Yvonne has Incapacity Benefit at Yvonne has Incapacity Benefit at £106.40 weekly or £5,532.80 yearly. £106.40 weekly or £5,532.80 yearly.

They already have Child Tax Credits at They already have Child Tax Credits at about £81 weekly is this correct?about £81 weekly is this correct?

Calculation:Calculation:

Basic element £1,920 Basic element £1,920 Couple element £1,890Couple element £1,89030 Hour element £ 79030 Hour element £ 790

Family element £ 545Family element £ 5452 x Child Elements 2 x Child Elements £4,600£4,600

Maximum award £9,745Maximum award £9,745

This is £187.40 weeklyThis is £187.40 weekly

Due to their joint income/s at Due to their joint income/s at £20,532.80 yearly (£15,000 + £20,532.80 yearly (£15,000 + £5,532.80) this is well over the £5,532.80) this is well over the minimum at £6,420 to allow the full minimum at £6,420 to allow the full award. award.

Their full award at £187.40 weekly Their full award at £187.40 weekly will be reduced by 39% of the will be reduced by 39% of the excess income.excess income.

Calculation: (Excess income)Calculation: (Excess income)

£20,532.80 - £6,420 = £20,532.80 - £6,420 =

£14,112.80 excess income £14,112.80 excess income

£14,112.80 x 39% = £5,503.92£14,112.80 x 39% = £5,503.92

Which is £105.85 weeklyWhich is £105.85 weekly

So their maximum weekly award So their maximum weekly award

due at £187.40 weekly is reduced due at £187.40 weekly is reduced

by £105.46 leaving £81.54 to be by £105.46 leaving £81.54 to be

paid weekly or £4,240.08 yearlypaid weekly or £4,240.08 yearly