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 are on a low income, you may qualify for Working Tax Credit.

On this page:

Who can get tax credits?

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

Check if you qualify for tax credits - quick questionnaire

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 £92 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 £25 a week in tax credits.

How tax credits work

You'll need to make a joint claim for tax credits if you are any of the following:

  • married
  • a man and woman living together as if you are married
  • part of a civil partnership
  • a couple living together as if in a civil partnership

You can only make a single claim if you don't have a partner.

The Tax Credit Office will 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 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 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 the Tax Credit Office are based on your current personal circumstances and your income from the tax year that ended on the 5 April 2010.

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 2010, your payments will be worked out from that date until 5 April 2011. Claims can usually be backdated for up to three months - sometimes longer - from the date the Tax Credit Office received your claim form.

Each year during April, May and June the Tax Credit Office will 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 the Tax Credit Office check that the payments they made to you were correct. It also allows us to base your payments for the year ahead on the right amount of income.

Sometimes the Tax Credit Office will have paid you too much or not enough. If this happens they will make an adjustment to make sure that your payments are correct. Any payments made from 6 April 2011 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 the Tax Credit Office as soon as possible to tell them about any changes.

Tax credits: changes you need to report and when

More useful links

How to claim tax credits

Tax credits questionnaire - find out how much you can get

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