Child tax credits

Child Tax Credits

It’s very common for people to assume that they will not be eligible for benefits over and above Child Benefit. In fact the vast majority of UK families are eligible for additional financial assistance. The most commonly misunderstood one is Child Tax Credits from the Government. This is tax-free income for households with children. These are made up of a number of elements and are worth different amounts as they are means-tested based on your circumstances.

How much could I receive?

You can claim Child Tax Credits whether you’re in work or not. You are usually eligible as long as your family income is no more than £40,000. If you earn more you may be entitled to a portion of the credit.

The credit is made up of a series of different and separate elements, and the total you get is the sum of all those different parts. There is a family element that most families get and a child element payable for each child, and you might receive extra if your child has a disability.

What are the different elements of Child Tax Credit and how much are they?

All of the above are maximum payments and your eligibility for them is means tested. Therefore the more you earn the less you will receive and vice versa.

Source : HMRC

How much could I get?

There are a number of variables that determine the amount that you could receive, for example if you are lone parent or how many hours you (and your partner) work in a week.

You can use HMRC’s online calculator to get a rough idea of the amount you are due.

How are they paid?

Child Tax Credits are paid directly to your bank or building society. As they are a state benefit, you are not taxed on this income.

Working tax credits – childcare

You may be able to get Tax Credits to help with the cost of childcare while you are working. You’ll need to be working at least 16 hours a week, although it’s possible you could still qualify as long as you were working the same amount before you went on maternity leave.

How much could I receive?

You can actually receive up to 70% of the cost of your childcare, up to a maximum of £175 a week, if you have one child. This increases to £300 a week if you have two or more children. The exact amount depends on your income, the lower it is the more you’ll receive. However, if you claim Childcare Vouchers from your employer the value of the vouchers you receive will be taken off the amount you can claim through Working Tax Credits. For example, if you claim the full £243 per month vouchers from your employer, the monthly amount of childcare help you can claim through Working Tax Credits reduces by this amount.

It's useful to work out which will give you the greater benefits as it's not always beneficial to take Childcare Vouchers. As a general rule if you earn under £25,000 per year you're probably better only using tax credits, but if you earn over £35,000 per year you're probably better off taking vouchers. What type of childcare qualifies? They must be a Government registered or approved childcare provider and could be a childminder or nursery. The following bodies register childcare providers in the UK.

• Ofsted in England
• The Care and Social Services Inspectorate for Wales
• The Scottish Commission for the Regulation of Care
• A Health and Social Services Board or Trust in Northern Ireland

It’s always advisable to use a properly registered provider.

Claiming tax credits

You need to fill in a claim form available from the Tax Credit Helpline on 0845 300 3900 (call charges may apply). They can also give you help filling it in.

When you make a claim you’ll need to give HMRC details of your income for the last tax year. A tax year runs from 6 April one year to 5 April the next year.
 
To make your claim you might need the following information to hand:

• your National Insurance Number
• your income for the last tax year if you were employed - you can get this from your P60 or your final payslip for the tax year
• details of your income for the last tax year if you were self-employed
• details of any benefits you get like contribution-based Jobseeker's Allowance or Carer's Allowance
• details of other income you get like savings interest, pensions or rent
• details of any childcare payments you make if you use a registered or approved provider

You’ll get a set of notes with your claim form that will help you fill it in but don’t forget to use the helpline if you need it.