Tax credits are means-tested, tax-free payments. There are two types:

Government has announced a range of changes to the welfare benefits system and many of these will come into force in April 2017. Tax credits are going to change and some people will not be eligible for as much money as they were before. View a list of the changes and find out how they may affect you.

Whilst tax credits are means-tested, your savings are ignored. There is no capital limit but any income you receive from those savings above £300 per year may reduce the amount paid to you.

There’s no set limit for income because it depends on your circumstances (and those of your partner). Tax credits consist of one or more ‘elements’. Both child and working tax credits have disability elements.

All the elements you are eligible for are added together. The total is compared to your income and any reduction due to this income is calculated. The resulting amount will be your tax credit award. Tax credit awards are annual. 

Child Tax Credit elements

  • family element 
  • child element - for each child in the family (standard rate / disabled child rate / severely disabled child rate)

Working Tax Credit elements

  • basic element
  • couple element
  • lone parent element
  • childcare element
  • 30 hour element
  • disabled worker element
  • severe disability element 

Child Tax Credit

You could get a basic amount known as the ‘family element’. From 6 April 2017, you will only get the family element of Child Tax Credit if you’re responsible for a child or children born before that date.You could get the child element for each child you’re responsible for if they’re:
  • under 16 or
  • under 20 and in eligible education or training
From 6 April 2017, most people will only get the child element of Child Tax Credit for up to 2 children. You’ll still be able to claim it for more than 2 children if they were born before 6 April 2017.
 

How much you get depends on things like your income and circumstances, for example if your child is disabled. There are three different rates of the child element.

  • Standard: Payable in all other cases (a non-disabled child aged 16 or under (or 20 and under in eligible education)
  • Disabled: Receiving any rate of Disability Living Allowance or Personal Independence Payment (or would receive if not in hospital)
  • Severely disabled: Getting high rate care component of Disability Living Allowance or  enhanced rate daily living component of Personal Independence Payment (or would receive if not in hospital) or Armed Forces Independence Payment
Use the Tax Credit calculator to work how much you could get. 

Working Tax Credit

You could get Working Tax Credit if either of the following apply:
  • you’re aged from 16 to 24 and have a child or a qualifying disability
  • you’re 25 or over, with or without children
You must:
  • work a certain number of hours a week
  • get paid for the work you do (or expect to)
  • have an income below a certain level
If you qualify, you’ll get the basic amount of Working Tax Credit but you could get more (or less if there are deductions to make due to your income) depending on your circumstances and income. You must work a certain number of hours a week to qualify.

Working Tax Credit elements

  • basic element
  • couple element
  • lone parent element
  • childcare element
  • 30 hour element
  • disabled worker element (see defining disability below)
  • severe disability element (see defining disability below)
 
Circumstance Hours a week
Aged 25 to 59 At least 30 hours
Aged 60 or over At least 16 hours
Disabled At least 16 hours
Single with 1 or more children At least 16 hours
Couple with 1 or more children Usually, at least 24 hours between you (with 1 of you working at least 16 hours)

Self-employed?

Some self-employed people are not eligible for Working Tax Credit. To qualify, your self-employed work must aim to make a profit. It must also be commercial, regular and organised. Use the Tax Credit calculator to work how much you could get.

Defining disability for disabled worker element

This is quite complicated as there are various conditions that may mean you qualify for the disabled worker element. You’ll need to pass the disability test and the qualifying benefit test (pdf download)

How do I claim tax credits?

You can start a claim by calling the Tax Credit Helpline on 0345 300 3900 or textphone 0345 300 3909. 

Universal Credit

The Government is replacing Tax Credits with Universal Credit. Depending on where you live, a new claim for tax credits may be treated as a claim for Universal Credit. Check to see if you will be affected.

Online benefits calculator

Calculate your entitlements online.