Types of Tax Credits
Currently, there are two types of tax credits administered by Her Majesty’s Revenue and Customs (HMRC) that provide financial support to individuals and families. Eligibility for one or both of the tax credits is dependent upon your circumstances.
The two tax credits available are the Working Tax Credit and the Child Tax Credit.
Working Tax Credit
The Working Tax Credit is available to all workers, whether they have children or not. It does not matter if you are an employee or if you self-employed. The amount of the tax credit you receive is dependent on your income level.
There are four different ways to qualify for the Working Tax Credit:
1. If you 16 or over and are responsible for a child or young person, you can get the Working Tax credit if you work over 16 hours a week and earn a low income.
2. You may get a Working Tax Credit if you are 25 or over and you work at least 30 or more hours a week. In this case, you do not have to have a child or young person in order to submit a claim.
3. If you 16 years old or older and work 16 hours or more a week, you can get a Working Tax Credit if you are disabled and you receive a qualifying benefit.
4. If you are 50 years of age or older, work over 16 hours a week and have been getting certain benefits for the last six months prior to starting work, you may get a Working Tax Credit.
Child Tax Credit
The Child Tax Credit is designed to financially support families with children. A claim can be submitted if you, or your partner, are responsible for at least one dependent child or young person (aged 16, 17, 18 or 19) who usually lives with you.
When a child or young person lives with more than one family, you and that other family must jointly decide who will submit the claim. This person will receive the tax credit. If you are unable to determine who holds the main responsibility for the child, you can contact the Tax Credits Helpline for assistance.
The Child Tax Credit has several elements that allow for you to receive additional benefits. For instance, if you have a child who has a disability or a child under one year old, you are eligible for additional income.
In order to receive the Working Tax Credit or the Child Tax Credit you must be living in the UK. If you are an immigrant living in the UK, you may have difficulty claiming a Working Tax Credit, as it is dependent on your immigration status. You can phone the Tax Credits Helpline for help determining your eligibility.
Whether you are eligible for the Working Tax Credit, the Child Tax Credit, or both, you can get a reasonable estimate of your tax credit entitlement by using an online tax credits calculator.