Tax Guides & Tips – Tax Credits & How To claim

Tax credits are available if you are a low earner, are disabled or have children and many more people are eligible than they think. We guide you through what you need to know.

Who qualifies?

If you are responsible for at least one child or young person who normally lives with you, you may qualify for, for example, the Child Tax Credit.

But you don’t need to have children to qualify. For example if you are employed but are on low wages, you could be eligible for the Working Tax Credit.

For those who are married, or living with a partner, they are required to make a joint claim for tax credits, single claims can only be made if you don’t have a spouse.

The easiest and quickest way to find out if you are eligible is to go to HM Revenue & Custom’s website and complete its online questionnaire.

If you think you qualify for tax credits, make the claim immediately. If you hang on you could end up losing money because tax credits typically can only be backdated up to three months from the date HMRC receives your claim form.

How is it paid?

If you qualify the government will pay into your bank, building society, Post Office or National Savings account, if it accepts Direct Payment.

This will happen either weekly or every four weeks. In terms of who gets the credits, if you are both working and both qualify, for the Working Tax Credit, you can decide whose account they should be paid into. In regards to the Child Tax Credit the payment is will be credited to the account of the primary carer.

…and remember!

It might be worth making a claim, even if you think your income is too high. You may want to consider it, especially if you expect your income to go reduce – such as in the case of redundancy.

So which children can I claim for?

HMRC states: ‘If you look after any children under the age of 16 – or under 20 if they’re in full-time education or approved training – you may be able to claim Child Tax Credit to help with the cost of looking after them.’

You can claim for a child who lives with you, up to August 31 after their 16th birthday. If your child is between 16 and 19, you can still claim tax credits for them if they are still in full-time education, up to and including ‘A’ levels, NVQ level 3 or Scottish Highers or in approved training like Entry to Employment, Skillbuild and Get Ready for Work.

If your child is between 16 and 17, and they’re not in full-time education or approved training, you can still claim tax credits for them for up to 20 weeks if they have signed up with the Careers Service, Connexions Service or Training and Employment Agency.

What about those who have adopted or fostered?

You can claim once you are not getting any money from your local authority or Health and Social Services Board. If you are unsure about your situation, call the Tax Credit helpline on 0845 300 3900.

My child sometimes lives with me but sometimes lives with my former partner? Can I claim?

In such cases, just one of you can claim tax credits for them. Child Tax Credit is usually paid directly to the person who is the child’s main carer.

If I qualify, how much should I expect to receive?

The major issue to be considered is your income. The basic rule of thumb is the lower your income, the more tax credit you are likely to receive.

Here are two examples from HMRC:

Example 1

Mr and Mrs Smith both employed full-time have a combined income of circa £25,000 per annum and 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 are they worked out?

Every year between April and June, HMRC, will contact you via post to help you renew your claim. It asks you to double check the information it has about your personal circumstances, such as confirming the amount of income you received in the latest tax year. HMRC will then ensure that the payments are made to you, and those due are correct.

Any tax credit you receive will be based on your present circumstances and currently on your income from the tax year that ended April 5 2008.

And for individuals making a new claim, payments will typically run from the date of the claim to the end of the tax year. For example, if an individual made a claim on November 10 2008, the payments will be worked out from that date until 5 April 2009.

But there are a number of other factors to be considered, when deciphering how much tax credits you should be paid.

These include:

• How many children you have living with you
• Whether you work – and how many hours you work for
• If you pay for childcare
• If you or any child living with you has a disability
• If you are aged 50 or more and are coming off benefits

How can I claim tax credits?

You need to complete a claim form. You can get hold of a tax credits claim pack from the Tax Credit Helpline on 0845 300 3900, or textphone 0845 300 3909. The helpline is open from 8.00am to 8.00pm seven days a week except Christmas Day, Boxing Day and New Year’s Day.