What is Working Tax Credit?
Working Tax Credit is extra money paid by the government to top up low and middle earnings.
Who can claim Working Tax Credit?
To claim Working Tax Credit you must be employed or self-employed and
- have children and work 16 hours or more a week (see below), or
- be disabled and work 16 hours or more a week, or
- be aged 50 or over and be returning to work of 16 hours or more a week, or
- be aged 25 or over, as a single adult or couple without children, and work 30 hours or more a week.
Some facts about Working Tax Credit
Children include young people aged 16, 17, 18 or 19 in full time education. It also includes young people aged 16 or 17 who have just left school or college, registered with Connexions, and are waiting for a place on a training scheme.
Students can claim Working Tax Credit if they are in paid work and fit into one of the groups listed above. Student loans, NHS bursaries and most student grants are ignored when your Working Tax Credit is worked out.
Working Tax Credit doesn't include any allowances for children because these are now paid through Child Tax Credit. So, if you have children you should also claim Child Tax Credit. One claim form covers both tax credits. Working Tax Credit can, though, include help with certain childcare costs. For couples, the childcare part of Working Tax Credit is paid to whichever one gets the Child Tax Credit.
Working Tax Credit is paid until the end of the tax year (the tax year runs from April to April). One of the forms automatically sent to you at the end of the tax year will be for reclaiming your tax credit.
Working Tax Credit, except for help with childcare costs, is paid through your wages if you are an employee, although for the first few weeks it will be paid directly to you from HM Revenue & Customs.
Update: A change was made between November 2005 and April 2006, with all payments being made directly from HM Revenue & Customs to employees.
Self-employed people are already paid directly by HM Revenue & Customs. Payments that come direct from HM Revenue & Customs normally have to go into a bank or post office card account.
Working Tax Credit affects how much Housing Benefit and Council Tax Benefit you can get. If you live in Manchester you should tell the Benefits Service (external website) at Manchester City Council immediately if you are awarded Working Tax Credit or if there is any change in your Tax Credits or other income.
Getting Working Tax Credit might also help you to get Health Benefits or a Funeral Expenses Payment.
How much will I get?
The amount will depend on your yearly income and which of the following eight elements you are eligible for:
- Basic element
- Second adult element
- Lone parent element
- 30 hour element
- 50+ element
- Disability element
- Severe disability element
- Childcare element
Examples of Working Tax Credit (April 2005 - April 2006)
Manchester Housing resident Carole is a single person aged 28 years. She works 30 hours a week and earns £9000 a year. She will receive about £17 a week Working Tax Credit. Carole is entitled to a very small amount of Housing Benefit, but she must pay almost all her rent and her full Council Tax herself.
Housing Association tenant Joanna is a lone parent with two children aged six and twelve years. She works 20 hours a week, has no childcare costs and earns £100 a week. She will get about £58 a week Working Tax Credit AND about £75 a week Child Tax Credit AND Child Benefit. Joanna can get some help towards her rent from Housing Benefit, but pays most of her rent and all her Council Tax herself.
Home owners Nusrat and Ahmed have two children aged four and eleven years. Ahmed works 35 hours a week and earns about £12,000 a year. They will receive about £44 a week Working Tax Credit AND about £75 a week Child Tax Credit AND Child Benefit. Nusrat and Ahmed pay their mortgage costs and full Council Tax themselves.
How do I claim Working Tax Credit?
You can claim online (external website) through the HM Revenue & Customs website or you can get a claim form and further information by phoning the Inland Revenue New Tax Credit Helpline on:
0845 300 3900 (Voice), or 0845 300 3909 (Textphone).
Each year you will have to renew your award. If you have been overpaid tax credits, ask HM Revenue & Customs to explain their decision properly. Then seek advice.
What if my circumstances change?
Initially your Working Tax Credit is worked out on a previous year's income. Phone HM Revenue & Customs if your current year's income is lower or more than £25,000 higher than the income used to work out your WTC. Phone HM Revenue & Customs straight away with details of any change in your working, childcare or family situation, or income. This should help prevent any underpayment or overpayment of Working Tax Credit.
Tax Credits Office
HM Revenue & Customs
Preston
PR1 0SB
Telephone 0845 300 3900
Working Tax Credit when you are unable to work
Working for an employer?
You will carry on getting Working Tax Credit during the first 28 weeks of sickness if:
- You get Statutory Sick Pay, or
- Short-Term Lower Rate Incapacity Benefit, or
- Income Support, or
- Are sending in medical certificates to your local Jobcentre Plus to get National Insurance Credits.
You will only carry on getting Working Tax Credit after 28 weeks if your partner also qualifies for it.
Self employed?
You will carry on getting Working Tax Credit during the first 28 weeks of sickness if:
- You get Short-Term Lower Rate Incapacity Benefit, or
- Income Support, or
- Your earnings are at least £84 a week (April 2006 - April 2007 figure), or
- You are sending in medical certificates to your local Jobcentre Plus to get National Insurance credits.
You will only carry on getting Working Tax Credit after 28 weeks if your partner also qualifies for it.
At 28 weeks of sickness
You must tell the HM Revenue & Customs Tax Credit Office if you are still sick at 28 weeks so that your tax credit can be adjusted or stopped. Do this as soon as possible so that you are not overpaid.
Need more help? Live in Manchester? Send us an email or book an appointment with the Online Adviser
Information on other websites
HM Revenue & Customs
Government information about tax credits
Directgov
Government information about understanding tax credits, checking if you are eligible, renewing awards or appealing awards.
Adviceguide
Information from Citizen's Advice about tax credits
Hertfordshire County Council
Information on working tax credit and fuller details of how to maintain or renew your claim
Need more help? Live in Manchester? Send us an email
Information Provider:
Manchester Advice
Date Reviewed:
5 April 2006
This information is for guidance only and is not an authoritative statement on the law. Please read our Terms and Conditions.
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