How to apply for tax credits


Tax credits are payments from the government. If you're responsible for at least one child or young person, you may qualify for Child Tax Credit. If you work, but are on a low income, you may qualify for Working Tax Credit. You can often get both types of tax credits. They aren't taxable. Here's the lowdown on tax credits and how to apply.

Nine out of 10 families with children qualify for tax credits, but you don't need to have children to claim. You may also qualify if you're working and on a low income.

"If a person with several children moves into a low-paid job then it is very likely they will earn less than they receive in benefits. The same is likely to be true even for someone with a small family if they can only find part-time work. This means that without any in-work benefits, some people will be actually worse off in work - there is a disincentive to get a job. Working tax credits are meant to get rid of this disincentive." Takver 

How much you get depends on things like how many children you have living with you, whether you're in a couple, whether you work (and how many hours) and whether you pay for childcare.

"I'm a single mum (didn't start out that way). I work 30 hours a week (less than average salary) and couldn't work if I didn't get help from tax credits. I would really hate not to work... I always have done. For me, tax credits have been a real life-saver." Janos

Your payments depend on your income: the lower your income, the more tax credits you get. HMRC has a calculator so you can work out if you qualify.

The total annual income limit that generally applies in working out whether you can claim tax credits is £41,300 if you have children. But it's not a blanket figure - for example, if you have a big family and pay a lot in childcare, or if you have a disability, the income limit might be higher.

The tax credit calculation is pretty complicated - if you want help working out what you might be eligible for, talk to an experienced adviser at a Citizens Advice Bureau. 

How to apply for Child Tax Credit

Contact the Tax Credit Helpline on 0845 300 3900 (text phone 0845 300 3909) for an application pack. The application form for your first claim is Form TC600. You apply for Working Tax Credit on the same form.

The application form requires a lot of information, including your income for the previous tax year. So if your income is going to be very different for the current tax year, let HMRC know.

If you have problems filling in the form, consult the notes that come with it, but if you're still not clear, phone the tax credit helpline or consult an experienced adviser, for example, at a Citizens Advice Bureau. 

How tax credits work

If you're married, or living together as if you were married, or in a civil partnership, you have to make a joint claim for tax credits.

If you and your partner are both working and you both qualify for working tax credit, you can decide which one of you will get the payments.

If you're claiming child tax credit and you're in a couple, you need to decide which of you is the main carer, as that person will get the money into her or his account (or your joint account).

Renewing tax credits

If you get tax credits, you’ll be sent a renewal form each year between April and July. Beware of missing it - if you do, your payments cease and you'll be asked to repay all the money since April. The renewal pack is designed to check that you got the correct payments last year - underpayments or overpayments will mean you lose out, ultimately.

Changes to tax credits

Changes to tax credits, announced by Chancellor George Osborne in his 2010 Budget, came into effect in April 2011 and have cost some families hundreds, if not thousands, of pounds - the average pay-out before the changes was around £3,500 a year. 

Use this calculator to find out how the tax credit changes affect your family.

"On the rumour that the current government is going to take away tax credits completely, and raise the tax threshold, I have to say that would penalise the most vulnerable of us, ie those on the lowest incomes, who earn the least and pay the least tax, therefore we would lose a lot more than we would gain." Missymarmite

And if you're perplexed about any aspect of tax credits, avail yourself of the 24/7, collective wisdom that is Mumsnet Talk.


Disclaimer: Any content in our money section is intended as general information only. For specific advice about your personal financial situation, get advice from qualified, regulated professionals.

Last updated: 20-Mar-2013 at 2:19 PM