What is Working Tax Credit?

Did you know?

Tax credits are tax-free and you don’t have to be paying National Insurance or tax to qualify.

Working Tax Credit is there to give your income a boost if you’re working and on a low income.

You can’t claim Working Tax Credit if you’re claiming Universal Credit.

Who qualifies for Working Tax Credit?

Depending on your circumstances, you may be able to claim Working Tax Credit if you’re over 16.

But if you don’t have a child or a disability you’ll need to be at least 25.

You also have to be working a minimum number of hours:

Your circumstance Minimum number of working hours a week
Aged 25 to 59 30
Aged 60+ 16
Disabled 16
Single with one or more children 16
Couple with one or more children Usually at least 24 hours between you (with one of you working at least 16 hours)

How much is Working Tax Credit?

If you’re eligible, you’ll get a basic amount of £1,960 a year (known as the ‘basic element’).

You’ll get extra amounts (‘elements’) on top of this, depending on your circumstances.

The rates for the 2015 to 2016 tax year are:

Element Yearly amount
For a couple applying together or a single parent (the ‘couples and lone parent element’) Up to £2,010
If you work at least 30 hours a week (the ‘30 hour element’) Up to £810
If you work and are disabled (the ‘disability element’) Up to £2,970
If you’re severely disabled (the ‘severe disability element’) Up to £1,275
If you’re paying for registered or approved childcare (the ‘childcare element’) Up to 70% of your childcare costs

How much you’ll get

The amount you get for each element depends on things like:

  • your income
  • how many hours you work
  • whether you have a disability
  • whether you have children
  • whether you pay for childcare

If your annual household income is £6,420 or below, you’ll get the maximum amount for each Working Tax Credit element you qualify for. This is called the ‘income threshold’ – anything you earn above that will reduce the amount you can get.

Working Tax Credit to help with childcare costs

If you work at least 16 hours a week and pay for childcare, you might be able to claim the ‘childcare element’ or Working Tax Credit to help with up to 70% of your childcare costs.

If you’re in a couple, both of you need to be working at least 16 hours each to qualify.

You could be eligible if you’re employed or self-employed.

In most cases, you must use registered or approved childcare. This can include childminders, playgroups and nurseries.

How much can you get?

With the childcare element, you can get help with up to 70% of your childcare costs.

The table below shows how much you could get in the 2015-16 tax year:

Number of children If you pay up to: You could get up to:
1 £175 a week £122.50 a week
2 or more £300 a week £210 a week

If you pay more than this for childcare, you won’t be able to claim the childcare element of Working Tax Credit.

If you qualify for the childcare element, you won’t necessarily get the full amounts.

How much you get will depend on:

  • your income
  • the hours you work
  • your childcare costs

How to claim Working Tax Credit

Call the Tax Credits Helpline on 0345 300 3900 to get a claim form.

If you’re already claiming tax credits, call the Tax Credit Helpline to update your claim.

Keeping your tax credits up to date

You need to renew your tax credits claim every year if you want to keep getting them.

The Tax Credits Office will write to you to telling you what you need to do to renew your tax credits.

If your circumstances change at any time during the year (for example, if your income changes, your child leaves home or you move house), you should call the Tax Credit Office on 0345 300 3900 to let them know.

Changes in your circumstances can affect the amount of money you should be getting. For example, if your income drops, you may get more support. Or if your income increases, you could have to pay back any money you’ve been overpaid at a later date if you don’t let the Tax Credits Office know.

Other tax credits you might qualify for

If you have children and you’re on a low income, you might also be eligible for Child Tax Credit.

When you apply for Working Tax Credit, you’ll also be told whether you qualify for Child Tax Credit. There’s no need to claim them separately.

Working Tax Credit and Universal Credit

Working Tax Credit is one of the six benefits being phased out and gradually replaced by Universal Credit.

If you’re already claiming Working Tax Credit you probably won’t be affected right now.

Until you’re asked to make a claim for Universal Credit, you can continue to make new claims for tax credits.

At the moment, you would only need to claim Universal Credit instead of tax credits if:

  • you start living with a partner who already receives Universal Credit
  • you live in one of the areas where Universal Credit is being introduced and you lose your job

You can’t claim tax credits and Universal Credit at the same time. If you’re affected by Universal Credit, the Tax Credit Office will tell you what you need to do to close your Working Tax Credit claim.

Working Tax Credit income limits

There’s no clear income threshold for Working Tax Credit.

When you apply, the Tax Credit Office will take into account your circumstances (and those of your partner) when deciding how much you’re entitled to.

The income limits if you:

  • are over 25
  • don’t have a disability
  • pay for childcare (if you have a child)

If this applies to you and your annual household income is above the limits in the table, it’s unlikely you’ll be eligible for Working Tax Credit.

You can see entitlement tables for other circumstances at GOV.UK.

Number of children Annual household income limit for 2015-16
None – single person £14,000
None – couple £19,000
1 £45,000
2 £60,000
3 £70,000