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Tax Credits

This guide for RCN members outlines the requirements for Tax Credits and includes information on how to apply.

Introduction - what are Tax Credits?

Tax credits are regular payments to support people on low income or those with childcare costs and responsibilities.

There are two types of tax credit:

  • Working Tax Credit
  • Child Tax Credit

Universal Credit is currently being introduced and will replace Tax Credits in the future. However, new claims for Tax Credits are still being accepted. Please be aware, you cannot claim Tax Credits and Universal Credit at the same time.

New claims can be made at any point during the year and usually take around 5 weeks to process. A claim form can be requested online or by contacting HMRC Tax Credit Office.

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Working Tax Credit

 You may be able to claim Working Tax Credits if you are:

  • between 16-24 years old and have children or a qualifying disability

  • you are over 25 years old.

You must also:

  • be working a specified number of hours per week (hours vary depending upon your age/circumstances)

  • receive pay for this work (which must not exceed the defined amount).

The minimum amount of hours you need to work to be eligible are as follows. If you are:

  • single aged 25 to 59  - at least 30 hours

  • single aged 60 or over - at least 16 hours

  • disabled - at least 16 hours

  • single with one or more children - at least 16 hours

  • part of a couple with one or more children - at least 24 hours between you, with one of you working at least 16 hours

Your Working Tax Credit will be calculated annually using information you’re your previous year’s P60. Payment is in instalments and can be paid weekly or four-weekly.

The basic amount is up to £1960 per year although, depending upon your circumstances, you may be able to claim additional ‘elements’. These are:

  • couple making a joint claim - up to £2010 per year

  • single parent - up to £2010 per year

  • working at least 30 hours per week - up to £810 per year

  • disabled - up to £2970 per year

  • you pay for approved childcare* - up to 70% of your childcare costs or £122.50 per week (one child) or up to 70% of your childcare costs or £210 per week (2 or more children).

*You may be eligible for this even if you do not qualify for Working Tax Credit due to your income.

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Child Tax Credit

You may be able to claim Child Tax Credit if you are responsible for children under 16, or under 20 if they’re in approved education or training

You do not need to be working to receive Child Tax Credit and there is no set limit on what you should earn to be eligible. How much you may get will depend on your circumstances and the Gov.uk Tax credit calculator will give you an indication of your entitlements.

The basic amount of Child Tax Credit is up to £545 per year (known as the ‘family element’). You may also be able to claim the following additional elements: 

  • for each child (child element)  - up to £2780

  • for each disabled child* - up to £3140 on top of the child element

  • for each severely disabled child - up to £1275 on top of the child and disabled child elements.

*A child in receipt of Disability Living Allowance, Personal Independence Payment or certified blind.

Only one household can receive Child Tax Credit for a child, which is worth bearing in mind if you and your child’s other parent are separated and share custody.

Any change of circumstances, such as an increase or decrease in income, or changes to a child’s needs should be reported as soon as possible to the Tax Credit Office to avoid incurring an overpayment.

Please note that from April 2017 you may only be able to claim the child element for up to two children. You will continue to receive tax credits for each child born before 6 April 2017 if you are already claiming when the change comes into force.

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Renewal of Tax Credits and reporting changes of circumstance

You will need to apply annually to have your Tax Credits renewed. HMRC will send you a renewal pack around the time of the new financial year (after 5 April). You have until July to complete and return this. You must include any changes to your circumstances.

It is very important to report any changes to your income or childcare costs as soon as possible, in order to avoid incurring an overpayment of Tax Credits. You can do this by contacting the HMRC Tax Credit Office to request a mid-term reassessment. Your award can then be amended accordingly.

Any overpayments will need to be repaid. HMRC can take measures such as changing your tax code to claw back an overpayment.

You can continue to claim Tax Credits if:

  • you’re on maternity, paternity or adoption leave for the first 39 weeks of your leave or the period of your ordinary paternity leave

  • you are off sick, you can claim for 28 weeks, whilst SSP is being paid

  • you lose or leave your job, or are made redundant, you can claim 4 weeks.

If you do not return to work after these periods, you must inform the Tax Credit Office.

Once you reach State Pension age, you would no longer be eligible for Working Tax Credit, but may qualify for Pension Credit if you are on a low income.

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Further Information

RCN support:

You may also find the following external links useful:

  • Turn 2 Us – useful benefits calculator and grants search tool.
  • Gov.uk - information on all aspects of Tax Credits
  • Child Poverty Action Group - advice from Child Poverty Action for parents on help available with childcare costs.
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Call the RCN on: 03457726100