Tax credits: what are you entitled to?

It’s worth finding out if you are eligible to claim tax credits, such as child tax credits. Find out more and how to claim here.

Some parents may think 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. There are two forms of tax credits to which you may be entitled: Child Tax Credit and Working Tax Credit.

Child Tax Credits

If you are 16 or over, responsible for at least one child, you will be entitled to Child Tax Credit if:

  • You have one child, and your household annual income is less than around £26,000.
  • You have two children, and your household annual income is less than around £32,200.

Even if you earn more than this you may still be entitled to Child Tax Credit under different circumstances. HM Revenues & Customs has a Tax credits calculator you can use to find out.

Who can get Child Tax Credits?

  • Child tax credits are given to people responsible for at least one child.
  • You are entitled to claim them whether you are working or not.

You will receive money for each child you are responsible for and if you live as part of a couple then you must make your claim as a couple.

How much are they worth?

Child Tax Credits are made up of two elements, family and child. The calculation of how much you’re entitled to will depend on your circumstances. The table below illustrates the maximum allowances you can expect.

Child Tax Credit elements

What it means

Current maximum amount

Family element - the basic element It's the basic payment if you are responsible for one or more children. £545
Child element This is paid for each of your children. It is paid on top of the basic family element and any baby addition. £2,720
Disability element This is an extra payment for each disabled child you have. £3,015
Severe disability element This is an extra payment for each severely disabled child you have. It is paid on top of any disability element. £1,220

Working Tax Credit

Working Tax Credit is a payment for people who are working and on a low income. You may be able to get Working Tax Credits to help with the cost of childcare while you are working.

Who is eligible?

Working Tax Credit can be given to any single parent older than 16 and responsible for a child, working at least 16 hours a week. If you’re part of a couple, and responsible for a child, you can receive this credit if:

  • either yourself or your partner works at least 16 hours;
  • and, as a couple you work at least 24 hours a week.
     

Childcare element of Working Tax Credit

The exact amount you receive will depend on your income, the lower it is the more you’ll receive.

Number of children

Weekly limit on costs

% of costs you can get help with

Maximum tax credits for childcare

One child £175 70% £175x70%=£122.50
Two or more children £300 70% £300x70%= £210

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.

HM Revenue & Customs provides further information and a calculator to help you decide what will be best for you.

What type of childcare qualifies?

They must be 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 when considering childcare.

Get ready for Universal Credit

 

Further information

HM Revenue & Customs has published Working Tax Credit – Help with the cost of childcare.

HM Revenue & Customs Childcare vouchers and tax credits – better off calculator.

See also the Money Advice Service and read their Parent’s guide to money.