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Benefits and tax credits for people in work

Extra money for people in work

If you are working, you may still be able to get benefits or tax credits if you are on a low income. It does not matter whether you are working for someone else or self-employed. The benefits you can get depend on your circumstances, your earnings and other money you have coming in, and on how many hours you work each week. There are different benefits for people who work less than 16 hours a week and for people who work 16 hours or more.

This information is mainly for people who work at least 16 hours a week. There is also information about help if you work less than 16 hours, and if you get certain benefits and then start work or increase your hours or wages.

Working out how many hours you work

If you have more than one job, you should add the hours from both jobs together. If the number of hours you work changes from week to week, your benefit will depend on your average hours. (see under heading Help when you start work).

If you are not sure how the hours you work will be treated for benefit purposes, you should consult an experienced adviser - for example, at a Citizens’ Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

If you work fewer than 16 hours

If you work fewer than 16 hours a week, you may be able to claim Income Support or Jobseeker’s Allowance. However, if you have a partner who lives with you and works 24 hours a week or more, you will not be able to claim these benefits. Your partner may be able to claim Working Tax Credit instead (see under heading Working Tax Credit). This applies whether your partner is lesbian, gay or heterosexual and whether you are married, in a civil partnership or just living together.

You could also be entitled to some Housing Benefit and Council Tax Reduction to help with the costs of rent and Council Tax. If you have children, you can claim Child Tax Credit and Child Benefit. You can get these benefits whether or not you do any work. You may also be able to get help such as free prescriptions, free school meals, help with the costs of a new baby or help with funeral costs, depending on the benefits or tax credits you get and your income.

If you work 16 hours or more a week

If you work 16 hours or more a week, you may be entitled to Working Tax Credit (see under heading Working Tax Credit). This will depend on your circumstances and how much money you have coming in. You may also be entitled to other benefits, for example, if you are on a low income you could get some Housing Benefit and Council Tax Reduction to help with rent and Council Tax. If you have children, you can claim Child Benefit and you may also be entitled to some Child Tax Credit. You do not have to be working to get Child Tax Credit, but your earnings will affect the amount you get. You may also be entitled to other help such as free prescriptions, help with the costs of a new baby or help with funeral costs (see also under heading Other help while you are on Working Tax Credit).

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Working Tax Credit

You can get Working Tax Credit if you or your partner are working enough hours a week and your income is low enough. You don't need to have children to qualify.

You must be living in the UK. If you are from abroad, you may have difficulty claiming Working Tax Credit depending on your immigration status.

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Who can get Working Tax Credit

The number of hours a week you have to work to be able to get Working Tax Credit depends on your circumstances.

If you're single or in a couple, and have no children, you can qualify if:

  • you are 25 or over and you work at least 30 hours a week, or
  • you are 16 or over and you work at least 16 hours a week and you are disabled and you get a qualifying benefit, or
  • you are 60 or over and you work at least 16 hours a week.

If you're single and have at least one child, you can qualify if:

If you're in a couple and you are responsible for a child or young person, you can qualify if:

  • you are 16 or over and you or your partner works at least 16 hours a week and the two of you work at least 24 hours a week between you in total. For example, you can meet this condition if you work 16 hours a week and your partner works 8 hours a week. If only one of you works, that person must work at least 24 hours, or
  • you are 16 or over and you work at least 16 hours a week and you are disabled and you get a qualifying benefit
  • you are 16 or over and you work at least 16 hours a week and your partner is a hospital in-patient or entitled to Carer's Allowance or in prison or gets certain disability benefits
  • you are 60 or over and work at least 16 hours a week.

There is an online questionnaire you can use to find out if you might qualify for WTC. Go to HM Revenue and Custom's website at: www.hmrc.gov.uk.

Working Tax Credit if you are responsible for a child

If you are responsible for a child or young person, you can get Working Tax Credit provided you work at least 16 hours a week if you're single, or at least 24 hours between you if you're in a couple, with one of you working at least 16 hours a week. Some couples with children may qualify without working for 24 hours between them, provided one of them works 16 hours – see above. Your income also needs to be low enough. A child is someone under 16, and a young person is someone who is 16, 17, 18 or 19 and still in full-time education up to A level or equivalent, or on certain approved training courses. You are responsible for a child or young person if they normally live with you or you have main responsibility for their care. You cannot usually get Working Tax Credit if your child is in local authority care.

You may be able to get Working Tax Credit for a short period after your child is 16 or leaves school, depending on when their birthday is and what they do on leaving school.

If you are on maternity leave, paternity leave or adoption leave and you normally work 16 hours or more, you can claim Working Tax Credit before you go back to work, as long as you are responsible for a child. If it is your first baby and you are not responsible for any other children, you will have to wait until the child is born, or comes to live with you before you can claim.

Working Tax Credit if you are disabled

You can get Working Tax Credit if you are disabled provided:

  • you work at least 16 hours a week and
  • your income is low enough and
  • you get certain benefits because of your disability and
  • your disability puts you at a disadvantage in getting a job. HM Revenue and Customs may ask you to give them the name of a healthcare professional who can confirm how your disability affects your chances of finding work. This might be a doctor, occupational therapist or a community nurse.

The qualifying benefits include Incapacity Benefit, Disability Living Allowance, Personal Independence Payment, Armed Forces Independence Payment, Employment and Support Allowance, Attendance Allowance, Industrial Injuries Disablement Benefit, Statutory Sick Pay, a war pension with constant attendance allowance, occupational sick pay or Income Support or National Insurance credits awarded because you have been unable to work. There are rules about how long you have to have been getting some of these benefits before you claim Working Tax Credit. Some of these benefits stop once you are working, and some carry on.

If you are disabled and you are not sure whether you qualify for Working Tax Credit, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Your income and Working Tax Credits

Even if you meet the work conditions, you will only get Working Tax Credit if you have a low enough income. Your income for tax credits is assessed on an annual basis. Whether or not you get Working Tax Credit, and how much you get, depends on your income and your circumstances. Not all your income will be taken into account (for example, maintenance and child support, most Statutory Maternity, Paternity or Adoption Pay and all Maternity Allowance paid to you is ignored). Usually, HM Revenue and Customs (HMRC) will use your income for the previous tax year to work out what you are due. You should report major changes in your income to HMRC, otherwise you may be overpaid or underpaid tax credit.

For more information, in England, Wales and Scotland, about overpayment of tax credits, see Overpayment of tax credits, in Benefits fact sheets.

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How much Working Tax Credit will you get

The maximum Working Tax Credit you can get is calculated by adding together different elements which are based on your circumstances.

There is a basic element which is included for anyone who is entitled to Working Tax Credit.

There is a second adult element if you are claiming as a member of a couple although there are some circumstances where a couple will not get this. You have to claim as a couple if you live with a partner. This includes a partner of the opposite or same sex.

There is a lone parent element if you are a lone parent.

There is a 30 hour element if you work at least 30 hours a week (or if you are claiming as a couple with a child and you jointly work at least 30 hours).

There is a disability element if you are disabled, get certain benefits and you work at least 16 hours a week. You can also get a disability element if your partner qualifies for it or two disability elements if you both qualify.

There is a severe disability element  if you get the highest rate care component of Disability Living Allowance, the enhanced rate of the daily living component of Personal Independence Payment, the higher rate of Attendance Allowance, or Armed Forces Independence Payment. You will get two severe disability elements if you and your partner both qualify.

You may also be able to get a childcare element. This is equivalent to up to 70% of childcare costs provided by a registered childminder, out-of-school club or another approved provider. There is a limit on the maximum eligible weekly childcare cost which means that the most this element can be is 70% of the maximum.

Rates of Working Tax Credit

Element of Working Tax CreditMaximum annual amount from 6 April 2013Maximum annual amount from 6 April 2014
Basic element£1,920£1,940
Second adult element£1,970£1,990
Lone parent element£1,970£1,990
30 hour element£790£800
Disability element£2,855£2,935
Severe disability element£1,220£1,255
Childcare element (up to 70% of the maximum):Maximum weekly amount from 6 April 2013Maximum weekly amount from 6 April 2014
Maximum weekly eligible cost for one child £175.00 (maximum payable £122.00)£175 (maximum payable £122)
Maximum weekly eligible cost for two or more children£300.00 (maximum payable £210.00)£300 (maximum payable £210.00)

The tax credit calculation

To work out how much Working Tax Credit is due, the separate elements of Working Tax Credit which apply to you are added together. If you are entitled to Child Tax Credit as well as Working Tax Credit, your maximum Child Tax Credit is worked out at the same time and added to your maximum Working Tax Credit.

Your income for the tax year is compared to a threshold of £6,420. Usually, your income for the previous tax year is used. If your income is less than the threshold, you get the maximum Working Tax Credit (and Child Tax Credit if this applies). If your income is more than the threshold, your tax credit will be reduced. Working Tax Credit (except for the childcare element) is taken away first, followed by the childcare element. If your income is too high, you will not get any Working Tax Credit. However, you may still get some Child Tax Credit, if you are entitled, because this is the last part of your total tax credits to be reduced.

The tax credit calculation is complicated. To get some idea of how much you could get, you can use the online calculator on HM Revenue and Custom's website at: www.hmrc.gov.uk. If you want to check exactly how much WTC you should be getting, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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How to apply for Working Tax Credit

To apply for Working Tax Credit, contact the tax credit helpline for an application pack. The application form for your first claim is Form TC600. The helpline number is 0345 300 3900 (textphone 0345 300 3909).

The application form requires a lot of information, including your income for the previous tax year. If you have problems filling in the form, you can consult the notes that come with it, call the helpline, or consult an experienced adviser, for example, at a Citizens Advice Bureau.

It is also important to keep as much evidence of your personal circumstances as you can. You should keep P60s (or P45s if you have left a job), statements about any benefits you receive and statements from your bank or building society about any savings. Any documentation about your income or capital (and your childcare provider if you are claiming childcare costs) will help you to fill in the form.

When you apply for Working Tax Credit, you will have to provide your national insurance number. You will normally also have to give the national insurance number of any partner who lives with you. If you don’t know your national insurance number, but you think you have one, try to provide information that will help the office find your number. If you do not have a national insurance number, you will have to apply for one.

Once you have made your claim for tax credits, you can go online to find out how long it will take to get a response from HMRC. Use the 'Where's my reply?' service at www.hmrc.gov.uk.

For information on how to apply for a national insurance number, see National insurance – contributions and benefits.

Getting Working Tax Credit backdated

You may be able to get some Working Tax Credit for a period before you apply, if you met the conditions and could have claimed earlier. Getting tax credit for a period before you apply is called ‘backdating’. You do not have to give any reasons why you did not claim earlier. When you apply ask for backdated tax credit on your application form. You can normally only get Working Tax Credit backdated for a maximum of 31 days before the date you apply.

If you want any help with claiming backdated Working Tax Credit, you should contact an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Checks on Working Tax Credit, change of circumstances and fraud

You may commit tax credit fraud if you deliberately give incorrect or misleading information when you apply for tax credits, or fail to report a change of circumstances within one month of the change. Even if you are not committing fraud, you can cause an overpayment which will have to be repaid and you may have to pay a penalty. Your circumstances can be checked at any time while you are claiming and HM Revenue and Customs officers can also get information about you from other people including your employer or your childcare provider. They can ask you to supply bank statements and other evidence, and they may interview you. Tax credit fraud is a criminal offence and you can be prosecuted or made to pay a fine.

For more information on what to do if you are asked to attend an interview under caution, see Problems with benefits and tax credits.

For more information, in England, Wales and Scotland, about overpayment of tax credits, see Overpayment of tax credits, in Benefits fact sheets.

For more information, in England, Wales and Scotland, about reporting a change of circumstances, see Tax credits – reporting a change in circumstances, in Benefits fact sheets.

If you are worried about whether you might be suspected of fraud, you are under investigation or you have been convicted, or if you have been asked to repay an overpayment of benefit, you should consult an experienced adviser, for example, at a Citizens’ Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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How is Working Tax Credit paid

Working Tax Credit can be paid directly into your bank or building society account, or into a post office card account. If you do not give your account details to HM Revenue and Customs (HMRC), you may lose your entitlement to Working Tax Credit. If you have difficulties opening an account, you should get in touch with HMRC and explain.

For more information about payment of benefits and tax credits, see Payment of benefits and tax credits, and for more information about Child Tax Credit, see Benefits for families and children. For more information, in England, Wales and Scotland, about overpayment of tax credits, see Overpayment of tax credits in Benefits fact sheets.

If you have problems with the payment of Working Tax Credit, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

How long is working tax credit paid for

Tax credits are awarded for a complete tax year. A tax year runs from 6 April one year to 5 April the next year. If you claim after April, your award will run from the date you claim to the end of the tax year. The amount you get is usually set for a year. If your circumstances change during the period of your award you should tell HMRC as soon as possible. This is important because otherwise you may not be paid all the tax credit you are entitled to (an underpayment), or you may be paid too much and have to pay it back to HMRC (an overpayment). Some changes to your circumstances mean that your award ends and you have to claim again. Other changes mean that your award continues but it will be recalculated, and some will not affect your current award at all.

If your work ends, you can carry on getting Working Tax Credit for a further four weeks. This also applies if you start to work less than 16 hours a week, or in some cases, less than 30 hours a week.

For more information about overpayments, in England, Wales and Scotland, see Overpayment of tax credits in Benefits fact sheets.

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What happens if you claim universal credit part of the way through a tax year?

If you claim universal credit part of the way through a tax year, HM Revenue and Customs will decide how much tax credits you were entitled to for the part of the tax year up to that point. Your tax credits will then end, and you can get universal credit from this point onwards.

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Problems with Working Tax Credit

If you are refused Working Tax Credit and think you are entitled, or that the amount you are awarded is wrong, call the Tax Credits Helpline and ask HM Revenue and Customs (HMRC) to explain their decision. If you are not satisfied with the explanation, you can make a formal request for the decision to be looked at again. This is called a mandatory reconsideration. You must ask for a reconsideration within 30 days of the date of the decision. If you are not satisfied with the result of the reconsideration, you can then appeal to an independent tribunal. An HMRC fact sheet, 'What to do if you think your Child Tax Credit or Working Tax Credit is wrong', is available on the HMRC website at www.hmrc.gov.uk.

If you are unhappy with the service you have received from HMRC, for example, there have been long delays, or they have lost documents you sent to them, you should complain. You can do this whether or not you are also challenging an HMRC decision.

My partner and I have just adopted a child. We're on a low income and think we should get Working Tax Credit. As a gay couple, are we entitled to make a claim? We're also worried about how we'll be treated.

As a gay couple, you're entitled to make a claim for Working Tax Credit. Claims are dealt with by HM Revenue and Customs. They have a policy saying that they will not discriminate against you because of your sexuality. You should be treated fairly and politely whatever your sexuality. If you think you have been discriminated against, you can complain.

It's against the law for you to be treated unfairly because of your race, sex, disability, sexuality, religion or belief when HMRC decide about your Working Tax Credit claim. Also, HMRC has a policy which says they will not discriminate against you because of other things, such as if you've got HIV or if you have caring responsibilities. If you feel that you've been discriminated against, you can make a complaint about this.

For more information about making a complaint, see Problems with benefits and tax credits.

If you are not happy with a Working Tax Credit decision or you want to make a complaint, you can also consult an adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Information about tax credits in other languages and formats

You can get most HM Revenue & Customs leaflets about tax credits in Braille, audio, CD and large print on request. Leaflets about tax credits are also available in a number of community languages. To get copies, phone the Tax Credits Helpline on 0345 300 3900 (Textphone 0345 300 3909).

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Other help when you get Working Tax Credit

When you get Working Tax Credit, you may be entitled to other financial help. If you pay rent, you may be able to get Housing Benefit. If you have to pay Council Tax, you may be able to get Council Tax Reduction. Working Tax Credit is taken into account as income for both of these which means that it affects the amount of Housing Benefit and Council Tax Reduction you can get.

For more information about Housing Benefit, see Help with your rent - Housing Benefit, and for more information about Tax Reduction, see Council tax Reduction – what you need to know.

Being on Working Tax Credit may also give you access to other help. For example, you may be entitled to health benefits, including free prescriptions. You may also be able get help with the costs of a new baby from a Sure Start maternity grant or help with the costs of a funeral from a funeral payment. Whether or not you can get this help will depend on your income, whether you get a disability element with your Working Tax Credit and whether you also get Child Tax Credit.

For more information about health benefits, see Help with health costs, and for more information about maternity grants and funeral payments, see Help for people on a low income – the Social Fund.

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Help when you start work

You may be able to get some help with the costs of starting work if:

  • you start a new job; or
  • you increase your hours or wages; or
  • you go back to work after being sick or disabled.

Some kinds of help will depend on how long you have been unemployed, and some types of help are only for people on certain government schemes or training. If you want to find out what help you can get, you should ask at the Jobcentre.

Help with rent and Council Tax when you start work

When you start a new job, or increase your hours or wages, so that you come off certain out-of-work benefits, you may continue to get Housing Benefit and Council Tax Reduction paid at the same rate for the first four weeks of your new work arrangements. This extra benefit is known as ‘extended payments or extended reductions’. To qualify you must have been getting Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Contributory Employment and Support Allowance, Severe Disablement Allowance or Incapacity Benefit for at least 26 weeks before the change in your working circumstances. You can also get an extended payment if these benefits have stopped because your partner got a new job or increased their hours or wages.

You must tell your local authority about your new job or increase in hours or pay within four weeks of it starting. (In Northern Ireland this will be the Housing Executive.) If you are on a low income and will still be entitled to some Housing Benefit or Council Tax Reduction in your new job, you can carry on getting the benefit.

For more information about Housing Benefit, see Help with your rent - Housing Benefit, and for more information about Council Tax Reduction, see Council tax Reduction – what you need to know.

If you want to claim an extended payment or reduction and you are not sure if you qualify, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Help with mortgage interest when you start work

If you are getting help with housing costs paid with your Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance, you may be able to get this paid for the first four weeks that you are in work, or increase your hours. This is called the ‘mortgage interest run-on’.

You must have been getting Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance for at least 26 weeks, and you (or your partner) must have taken up a job, or increased your hours, so that you are no longer entitled to these benefits.

You should let the benefits office or Jobcentre know that you are starting full-time work as soon as possible.

If you are not sure whether you qualify for the mortgage interest run-on or you want more information, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Government employment schemes

For information about schemes which can help you to come off benefit and start a new job, see Government employment schemes.

Return to Work Credit after a period of ill-health

Return to Work Credit is a payment of £40 a week. You used to be able to get it if you went back to work after a period of ill-heath, as long as you had been claiming certain benefits. In England, Wales and Scotland, you can no longer apply for it. You can still apply for it Northern Ireland.

It is payable for a maximum of twelve months. You must apply for it within five weeks of starting work.

Return to Work Credit is non-taxable and is not counted as income if you're claiming Housing Benefit or Council Tax Reduction. It is possible for Working Tax Credit and Child Tax Credit to be paid at the same time as Return to Work Credit.

For more information about Return to Work Credit, you can ask at your local Jobcentre Plus office, or go to the GOV.UK website at www.gov.uk.

In Northern Ireland, you can find out more on the nidirect website at: www.nidirect.gov.uk.

No new payments of Return to Work Credit will be made after 1 October 2013. Payments that have already started by then will continue for up to 52 weeks.

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