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Tax credits

Working Tax Credit

Working Tax Credit is a top-up benefit which is payable if you work at least 16 hours a week and you're on a low income. It's not a tax allowance, but it's a non-taxable benefit. It's administered by HM Revenue and Customs (HMRC).

You can get Working Tax Credit if you're working or you're about to start work in the next seven days. Working Tax Credit will usually stop when you're not working. However, in some circumstances, you'll be treated as being in work even when you're not at work, for example for a period of sickness or for part of your maternity leave. Working Tax Credit may also continue for four weeks if you're moving from work to benefits.

Working Tax Credit eligibility rules

Working Tax Credit is payable if you're working 24 hours a week or more and:

  • You're responsible for a child or children.
  • You're a disabled worker and you're currently on certain disability-related benefits, or you've been on certain benefits in the past. You must also have a disability that places you at a disadvantage in getting work.
  • You're 50 or over and you're returning to work after 26 weeks or more on certain benefits (this support only lasts for one year).

It's also payable if you're 25 or over and working at least 30 hours a week.

You may qualify under more than one of these rules. If you only qualify because you're over 50 and returning to work, you may not qualify for Working Tax Credit after the first year.

You must be resident and present in Great Britain and not subject to immigration control. To find out more, see the advice on eligibility for Working Tax Credits below.

If you're eligible for Working Tax Credit, you'll only get a payment if your income is low enough. Unlike with many other benefits, there's no limit on the capital (such as savings) that you may have in order to receive Working Tax Credit, but any taxable income from your capital will be taken into account. Most other forms of taxable income will also be taken into account.

Working Tax Credit and Child Tax Credit

Working Tax Credit is payable alongside Child Tax Credit. If you qualify for both, you can claim them together. You must be working to get Working Tax Credit, but you can get Child Tax Credit whether or not you're working if you're responsible for a child and your income is low.

Working Tax Credit and Child Tax Credit are calculated annually, using your gross (pre-tax) income. They're usually based on your income from the last complete tax year, but in some circumstances your income for the current year is used, for example when you're currently earning less than you did in the previous year.

Working Tax Credit is paid directly into a bank or building society account or a Post Office card account every week or every four weeks.

The rules regarding overpayments of tax credits are different from those for the rest of the benefits system. For example, you don't have as many rights to challenge the recovery of Tax Credit overpayments.

The official online source of government information on benefits is GOV.UK.

Click on the bars below for more detailed information on Working Tax Credit, or follow the links to find information on:

What counts as work?

The rules about what counts as work for Working Tax Credit are complex, so you may want to seek further help and advice.

You can get Working Tax Credit if you're in paid work or you’re about to start paid work in the next seven days. Depending on your circumstances, you’ll need to be working for 16 hours or more a week or 30 hours or more a week.

For example, if you don’t have children and you’re not disabled, you'll still be eligible for Working Tax Credits if you're 25 or over and work for 30 hours or more a week.

You must expect your work to last at least four weeks, and the work must be done for payment or in expectation of payment.

Voluntary work, even if you get money to cover your expenses, doesn’t count as work.

Work done as part of a government scheme for unemployed people, such as the New Deal or Employment Zone programmes, may not count as work. This will depend on the payment you receive.

If you're providing care for someone who doesn't normally live in your home, this may not count as work for the purpose of claiming Working Tax Credit. It will depend on the payment and other arrangements. 

Working hours

Your normal working hours include regular overtime but not unpaid meal breaks. If you have more than one job, the hours you work are added together. If you're disabled and you're allowed paid time for hospital or clinic appointments to monitor or treat your disability, this counts as work time.

If your hours vary, an average will be taken. If you disagree with HMRC’s assessment of your hours, seek help and advice.

If you're a term-time worker in a school or educational establishment, or you do similar work where you have a recognisable work cycle over the course of a year, you're assumed to work your regular hours over the course of the year, not just the weeks in which you actually work.

If you're self-employed, the hours that you work for payment (or for which you expect to be paid) count.

If you have a period in which you don't work, you may still be regarded as working your normal hours. This can apply during gaps of up to seven days between jobs, or for up to four weeks of unpaid leave. 

Maternity, adoption and paternity leave

You can be counted as being in work while you’re on maternity leave, adoption leave or paternity leave.

You’re treated as working:

  • for the first 26 weeks of ordinary maternity leave, and the first 13 weeks of any additional maternity leave (a total of 39 weeks)
  • for the first 26 weeks of ordinary adoption leave, and the first 13 weeks of any additional adoption leave (a total of 39 weeks)
  • for the two weeks of paternity leave.

To continue to get Working Tax Credit during maternity leave, adoption leave or paternity leave, you need to have been working at least 16 hours a week (or 30 depending on your circumstances) immediately before you went on leave.

If you’re on maternity leave, adoption leave or paternity leave and you haven’t claimed Working Tax Credit before, you can claim as long as you were working at least 16 hours a week immediately before you went on leave.

Sick leave

If you’re off work because you're ill, you can also be regarded as being in work. You can continue to claim Working Tax Credit for the first 28 weeks you’re off work, as long as: 

  • You usually worked at least 16 hours a week (or 30 depending on your circumstances).
  • You were working these hours immediately before you went on sick leave.
  • You’re getting a qualifying sickness or disability benefit.

The qualifying sickness and disability benefits are: 

  • Statutory Sick Pay
  • Employment and Support Allowance (ESA)
  • Income Support because of incapacity for work
  • National Insurance credits because of incapacity for work, or limited capability for work 

When you stop working

You will also be treated as working for four weeks if you cease work or you start to work fewer than 16 or 30 hours a week, depending on your circumstances. This period gives you time to make appropriate benefit claims.

You're obliged to report certain changes in your circumstances to HMRC. If you reduce your working hours to fewer than 16 or 30 hours a week (or if you cease work altogether), you should report this right away. If you don't report certain changes within one month, you can incur penalties as well as overpayments.

Eligibility

Working Tax Credit is also payable if you're 25 years old or over and working at least 30 hours a week. You may also qualify if you’re 16 years old or over, you work 16 hours a week or more and:

  • You're responsible for a child or children (for more information, see below).
  • You're a disabled worker and you're currently on certain disability-related benefits, or you've been on certain benefits in the past. You must also have a disability that places you at a disadvantage in getting work. For more details, see How much Jobseeker's Allowance.  
  • You're 50 or over and you're returning to work immediately after a period of six months or more on certain benefits (this support only lasts for one year). For more details, see below.

To get Working Tax Credit, you must also be resident and present in Great Britain and not subject to immigration control.

Responsible for a child 

If you're responsible for a child or children, you only need to work 16 hours a week to qualify for Working Tax Credit. You count as being responsible for a child if the child normally lives with you and is:

  • under 16 or has reached 16, and August 31 after their 16th birthday has not yet passed 
  • under 20 and in full-time non-advanced education (at least 12 hours a week of supervised study or teaching, including GCSEs, A-levels, NVQs and government training). The young person must have begun the education or training before their 19th birthday
  • under 18 and has left school and registered with the Careers Service or Connexions Service. The young person remains your responsibility for Tax Credit purposes for up to 20 weeks

If a young person over the age of 16 has made their own claim for tax credits or other benefits, they will cease to be your responsibility.

If you're responsible for a child, your claim for Working Tax Credit is also a claim for Child Tax Credit. For more details, see Child Tax Credit.

Returning to work if you're 50 or older

You can receive Working Tax Credit if you work at least 16 hours a week and you're 50 years old. You have to have been claiming another benefit more than six months before claiming Working Tax Credit (or a total of six months with no more than 12 weeks between periods of claiming). Any of the following must apply:

  • You must have received Income Support, Jobseeker’s Allowance, Employment and Support Allowance (ESA), Incapacity Benefit, Severe Disablement Allowance. Alternatively, any of these could have been paid to your partner if the payment included an additional amount for you.
  • You must have received Retirement Pension plus Pension Credit or national insurance credits in place of Jobseeker’s Allowance, ESA or Incapacity Benefit. Alternatively, any of these could have been paid to your partner if the payment included an additional amount for you.
  • You (or your partner, if you have one) must have received Carer’s Allowance, Bereavement Allowance or Widowed Parent’s Allowance for part of the six months, followed by one of the benefits listed above.
  • You must have received a training allowance under the work-based learning for adults or training for work schemes. You only qualify for Working Tax Credit for 12 months in this case. 

Income

If you're eligible for Working Tax Credit, you'll only get a payment if your income is low. The threshold for 2012 is £6,420. If your income is less than the threshold, you will get the maximum Working Tax Credit. If your income is more than the threshold, your tax credit will be reduced. Unlike with many other benefits, there's no limit on the capital (such as savings) that you may have, but any taxable income from your capital, such as interest, will be taken into account. Most other forms of taxable income will also be taken into account.

Working Tax Credit and Child Tax Credit are calculated annually, using your gross (pre-tax) income. They're initially based on your income from the last complete tax year. If your income for the current year is going to be lower, this can be used instead, for example if you're earning less than you did in the previous year.

Find out how much Working Tax Credit you might get.

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The 2 comments posted are personal views. Any information they give has not been checked and may not be accurate.

Rob Finch said on 26 March 2010

Tictactoe10,
We can't answer your query here, but you can call us free on 0808 802 0202 to discuss your situation, or you can send us a message using the enquiry form (top right of the screen). Or you can call the Department of Work and Pensions benefit enquiry line on freephone 0800 882 200.

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Tictactoe10 said on 25 March 2010

I cet tax credit as a self employed person but I am on sick by order of my Dr. I have begun a claim for ESA and am waiting to hear from them. Can anybody tell me, will I still be able to get my Tax Credits and will I also be able to claim Council Tax benefit?

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Page last reviewed: 21/03/2013

Next review due: 21/03/2015

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