Introduction to Tax Credits

Tax credits are available in the UK if you are on a low income or if you are responsible for a child.  There are two main types of tax credit:

  • Working Tax Credit
  • Child Tax Credit

Many people are eligible for both types of tax credits, which are non-taxable payments made to you by the government.

Here, we look at what tax credits are available and who is eligible to receive them.

Are you eligible for tax credits?

According to HM Revenue and Customs (HMRC), nine out of ten families with children qualify for tax credits.  Even if you don’t have any children, you may still be eligible to claim if you’re on a low income.

Child Tax Credit is paid if you are responsible for at least one child, and you don’t necessarily have to be working to claim.  Working Tax Credit is paid based on the hours that you work and on your income.

What tax credits could I receive?

The amount of tax credits that you can claim differs from person to person and depends on a number of factors including:

  • How many hours a week you work
  • How many children live with you
  • If you live with a spouse or partner
  • If you pay childcare costs
  • Your income

What do I need to earn to claim tax credits?

Tax credits are aimed to support people with lower earnings and so there are annual income limits that generally apply.  Your tax credits may be reduced or stopped if you earn over:

  • £41,300 – if you have children
  • £12,900 – if you are single without children
  • £17,700 – if you are a couple without children

Only by making a formal tax credits claim will you be able to determine exactly what you are entitled to.  There are other factors that can be taken into account (such as the costs of childcare) and you may be entitled to more tax credits.

The entitlement limits and amount of tax credits paid also generally change every year and so the figures may be different in future years.

3 comments

  1. Gavin S says:

    My wife works about 24 hours per week doing various different jobs and her annual income is about £9,000. I am unemployed. We have 2 children – aged 2 and 8. Can I claim working tax credit, child tax credit and job seekers allowance all at the same time?

  2. Tax Fix says:

    Carla – In theory, yes you can. If you are responsible for children, you need to be aged 16 or over and do paid work of at least 16 hours a week to get Working Tax Credit.

    The amount of tax credits you will receive will depend on other factors such as how much you earn, what hours you work and whether you have a spouse or partner.

  3. Carla P says:

    If I have two children and work part-time, can I claim both tax credits?

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