Working Tax Credit and Child Tax Credit are tax-free payments made by the government. If you are responsible for a child then you may qualify for Child Tax Credit. If you work but are on a low income then you may qualify for Working Tax Credit. Often, people are eligible for both types of tax credit.
Our guide looks at the two main types of tax credit and what the income limits are for qualifying.
Types of tax credit
There are two types of tax credit, and you may be able to claim both:
- Child Tax Credit – paid to you if you are responsible for at least one child. You don’t have to be working to claim, and nine out of ten families with children qualify for this credit
- Working Tax Credit – paid to you based on the hours you work and your income. You have to be working to claim (either on an employed or self employed basis)
Income limits for getting tax credits
The annual income limit that generally applies in order to claim tax credits are:
- If you have children – £41,300
- If you are single without children – £12,900
- If you are a couple without children – £17,700
However, you should bear in mind that these limits don’t apply to everyone and that the limits could be higher if you pay a significant amount in childcare or you have a disability. These figures are based on the 2011/12 tax year and are likely to change in subsequent tax years.
How much do you get?
The amount of tax credits that you will receive will depend on your personal circumstances and will differ from person to person. In general terms, the amount of tax credits that you will receive will depend on a number of factors such as:
- How many children you have living in your household
- The amount that you pay for childcare
- Whether you work, and if so how many hours you work and what you earn
- If any of the children in your household has a disability
- If you live with someone as a couple
- If you are aged over 50 and are coming off benefits
Your tax credits will also depend on your income. Generally speaking, the lower your income, the more tax credits you are entitled to. In order to establish exactly how much you are entitled to, you should make a formal tax credits claim.