Tax credits are payments from the Government. There is Child Tax Credit, payable if you are responsible for a child or young person, or Working Tax Credit if you work but are on a low salary and work above a certain number of hours. You may be eligible for both Tax Credits and neither of them are taxable.
Child Tax Credit
Is payable to anyone that is eligible that is responsible for a child or young person. You do not have to be working to be able to claim this. This benefit ceases when the young person leaves school and goes into Higher Advanced Level Education (University) but can continue if your child attends a local college on a full-time course.
Working Tax Credit
This is based on the number of hours you work and how much you get paid. You need to work above a minimum number of hours to qualify and it must be paid employment not unpaid work.
Income limits for getting tax credits
It will greatly depend on your individual circumstances as to whether you can get Tax Credits and how much you will get.
These are the limits for getting tax credits in the current tax year - ending on 5 April 2014.You're not likely to get anything if your income is above these amounts. But it's important to know that:
These income limits don't apply to everyone - for example, if you have more children, pay for childcare, have a disability, or your child has a disability, the income limit for you could be higher
You need to make a claim to get a definite answer to how much you are entitled to.
What counts as income? Your income before tax and National Insurance is taken into account. When you first claim tax credits, your income from the previous year that ended on 5 April is used. If you're in a couple, your joint income is used. Earnings from work and some state benefits count as income. 'Other' income also counts.
This can include interest on savings, pensions or income from property - but only if the total amount was more than £300 for the year. The actual amount of any savings you might have doesn’t affect tax credits.
What can impact your Tax Credits?
The number of children you have living with you. If you live with a partner, are working or not, and how many hours that is. Other issues that could impact could be if you pay for childcare if your children are under a certain age, or if one or more of those children have a disability.
HRMC has a strange idea of what counts as a ‘Change of circumstances’. Changing your bank account details and moving home both count as a change in circumstances, as does changing a contact number. You cannot inform them of a change of address until you have moved though!!! If you need to tell about changing your bank details, you can give them the new details up to 30 days before you start using it. BUT you can only change your bank details twice in any twelve month period over the phone. Any more than that and you will have to inform the office in writing.
In order to keep your Tax Credits in place it is necessary to “renew” your Tax Credit claim for the following year, if you do not your tax credits could cease. You cannot begin the renewal process before you have received your renewal pack. It’s easiest done over the phone as most Tax Credits call staff are helpful and will aid you in answering the questions. It will also be processed quicker than if you send via post.
Starting and stopping work - or changing jobs:
Tell the Tax Credit Office if you or your partner start working - as employed or self-employed IMMEDIATELY!! It doesn't matter how many hours you're working, you still need to report it. You can tell the Tax Credit office before the job starts - but not more than seven days before. Get in touch no later than one month after you or your partner start working. Don’t wait, you could be overpaid and you will be expected to pay back the overpayment.
Similarly if your hours and pay reduce you could be missing out on extra money.
You will need to tell the Tax Credit Office your new employer's full pay office address and PAYE tax reference when you get in touch. Their PAYE reference should be on your latest payslip, or ask your employer if you're not sure.
Tell the Tax Credit Office if you or your partner:
- stop working altogether - whether you were employed or self-employed
- are no longer working, and you expect it to be four weeks or more before you start another job
- are laid off for more than four weeks - or until further notice
Get in touch as soon as possible once any of these changes happen, and within one month. There are special rules if you have been “Laid Off” from work.
You also need to inform the Tax Credits office if you change jobs or take on another job. There are special rules for Temporary jobs.
If you are changing your hours, you will need to inform the Tax Credits office if they fall below the minimum hours required for your personal claim.
The minimum hours depend on your circumstances, but normally you need to work at least:
- 30 hours a week if you don’t have children
- 16 hours a week if you have a disability, or are aged 60 or over
- 16 hours a week if you're single with children
- at least 24 hours a week jointly, if you're in a couple with children - with one of you working at least 16 hours a week
Report the change as soon as possible once it happens, and within one month.You also need to tell the Tax Credit Office within one month if either of the following happens:
- you or your partner were working at least 30 hours a week, and your hours have dropped to less than 30 hours a week
- you're in a couple with children, and your joint working hours drop to less than 30 a week
Once your child reaches 16 you may be able to continue to claim Tax Credits for that child. As long as your child remains in full time education (More than 12 hours per week supervised learning) you may able to claim up until your child reaches 20 as long as they are enrolled or accepted onto the course before their 19th birthday.
If your child decides to attend University, child tax credits will stop.
4UP can help you by informing you of what Tax Credits there are available and helping you to understand what you need to do to access those. The above is intended as an “at a glance” guide. The 4UP site team are able to answer further questions that you may have.