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What are tax credits?

What are tax credits?

Tax credits are payments from the government. If you're responsible for at least one child or young person who normally lives with you, you may qualify for Child Tax Credit. If you work, but earn low wages, you may qualify for Working Tax Credit.

Who can get tax credits?

Nine out of ten families with children get tax credits, but you don't need to have children to qualify. You may also qualify if you are working and earning low pay.

Tax credits - do you qualify?

How much do you get?

The amount of tax credits you get depends on things like:

how many children you have living with you
whether you work - and how many hours you work
if you pay for childcare
if you or any child living with you has a disability
if you're aged 50 plus and are coming off benefits

Your payments also depend on your income. The lower your income, the more tax credit you can get.

Example 1

Mr and Mrs Khan both work full-time. Between them, they earn about £25,000 a year. They have three children. They get about £55 a week in tax credits.
If their income was higher, and they earned about £50,000 a year, they'd get about £10 a week instead.

Example 2

Jon Barry is aged 30, not married and lives alone. He works full-time and earns £10,000 a year. He gets about £12 a week in tax credits.

How tax credits work

If you're married or living with a partner you'll need to make a joint claim for tax credits. You can only make a single claim if you don't have a partner.

We'll pay tax credits directly into your bank, building society, Post Office® or National Savings account if it accepts Direct Payment - either weekly or every four weeks.

Who gets the payments?

If you're both working and you both qualify for Working Tax Credit, you can decide who'll get the payments.

If you're claiming Child Tax Credit and you're in a couple you need to decide which one of you is the children's main carer. If you're the main carer then the money will be paid to you.

How tax credits payments work

The tax credits payments you receive from us are based on your current personal circumstances and your income from the tax year that ended on the 5 April 2008.

If you're making a new claim for tax credits your payments will usually run from the date of your claim to the end of the tax year. For example, if you make a claim on 10 November 2008, your payments will be worked out from that date until 5 April 2009.

Each year during April, May and June we write to you asking you to:

check the information we have about your personal circumstances
confirm the income you received in the year that has just ended
renew your claim

This helps us to check that the payments we've made to you were correct. It also allows us to base your payments for the year ahead on the right amount of income.

Sometimes we will have paid you too much or not enough. If this happens we will make an adjustment to make sure that your payments are correct. Any payments we make from 6 April 2009 to the date on which you renew your claim are temporary or provisional and if you don't renew, you may be asked to pay them back.

Changes at home and work

If your circumstances change it can affect the amount of money you should be getting. So please contact us as soon as possible to tell us about any changes.

Tax credits: how and when to tell us about changes

Contact us

You can contact our Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909 open from 8.00 am to 8.00 pm seven days a week except Christmas Day, Boxing Day and New Year's Day.