Claiming tax credits in 2018 and beyond

The who’s, what’s and the when’s of claiming tax credits.

Tax credits were created to help boost your household income and can be worth thousands of pounds each year. You may be able to claim Working Tax Credit if you’re working on a low income and claim Child Tax Credit if you have children. This post tells you more about what tax credits are, what they might mean for you and how to apply for them.

What exactly are tax credits?

Tax credits are payouts received from the government, given to those who need it — including those who need help caring for children, those who are disabled workers and for those on a low income. There are two types of tax credit — child tax credit and working tax credit.

Your circumstances determine if you are eligible for one or both of them.

Working Tax Credit

Working tax credit is a recurring payment from the government to help with day to day expenses for working people on low incomes. Depending on the number of hours you work per week and have an income below a certain threshold, you could get up to £1,960 a year in working tax credit.

This figure is called the ‘basic element’ of working tax credit. Everyone claiming working tax credit will receive this and is based on how much you earn.

You can get working tax credit whether you’re employed or self-employed — you just need to be working.

Find out more about Working Tax Credit.

Child Tax Credit

If you are responsible for one or more children then you are eligible for child tax credit to help top up your income; also you don’t have to be in work to claim.

Child tax credits are made up of different payments called ‘elements’. The amount you receive all depends on your income level, how many children you have and if any of them are disabled. To obtain the maximum amount of child tax credit your annual income must be less than £16,105 in the 2018–2019 tax year. This amount has been the same for 2 years now and will remain this figure in 2019–2020.

This means that if you earn more than this threshold, then you will receive less child tax credit corresponding to your annual income.

Do I qualify for tax credits?

You might be able to claim both the working tax credit and child tax credit at the same time if you’re eligible.

You won’t be able to know if you are eligible or not to claim until you’ve applied by filling out a TC600 form. However, by the rule of thumb, adhering to these points will give you a good indication.

To get working tax credit, you must:

  • be 25 or older with or without children
  • be 16–24 with a child or a qualifying disability
  • work a certain number of hours each week
  • get paid for the work you do, or expect to be paid for it
  • earn less than a certain amount

To get child tax credit you must:

  • be responsible for at least one child who is either under 16 or under 20 and in full-time education or training

If your still unsure if you are able to claim for tax credits then why not try HMRC’s online tool to see if you are likely to be accepted.

Claiming tax credits

If you want to claim tax credits, you’ll need to fill in the TC600 form mentioned above, make a request online or alternatively call the tax credit helpline on 03453003900.

I want to find out more about how to claim for tax credits on the GOV.UK website.

But aren’t the tax credits being replaced soon?

Universal credit is a new benefit that is gradually replacing working tax credit, child tax credit, job seekers allowance, income support, income-related employment & support allowance, and housing benefit. All to be merged into one payment paid out on a monthly basis.

You can carry on claiming for tax credits until you are asked to start applying for Universal Credits, but you cannot claim for both at the same time. Tax Credits are being slowly phased out by Universal Credit.

Universal Credit is a single monthly payment for everything and includes a standard allowance plus other elements, for example for:

  • caring
  • housing
  • children
  • childcare

This means that due to there only being one payment per month, it is now more crucial to budget ahead for things like rent, bills etc. This can be tough without any help. The amount you receive will depend on your circumstances.

Who should start claiming Universal credit?

If you are already claiming tax credit then you might be ok until early 2019. At the moment, you 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

We hope this has been a helpful post for those affected by the recent changes in Tax Credit and generally helped clarify the topic for those unsure. Next, why not read our guide to Universal Tax Credit, what this means and how the changes will affect people who can claim