UnderstandingTax Credits

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What are Tax Credits?

Green & Peter think more people should be claiming and we want to help you understand Tax Credits further…

Tax Credits are offered to support people with children or people on a

low income (usually below £13,100 P/A). Tax credits are payments made regularly by the state into your bank account and you would

usually be eligible if you are over 16 and living in the UK.

There are 2 types of tax credits and you could be eligible for one or both! The 2 types are Working Tax Credit and Child Tax Credit.

Working Tax Credit (WTC)

You can apply for WTC if:

• Your aged 16 or over• You work a certain number of hours a week• You get paid for the work you do (or expect to)• Your income is below a certain level

The basic amount of WTC it up to £1,940 a year – this can vary depending on your circumstances and income and you can apply for WTC even if you’re on leave or about to start a new job. On top of the basic amount, you may be entitled to “Elements” (extra credits) which are shown on the next slide.

If you’ve stopped working to have a baby, you’re entitled to get WTC for the first 39 weeks of maternity (or adoption) leave or paternity leave. To qualify you must have been working for at least 16 or 30 hours a week before your leave (hours depend on circumstance).

Working Tax Credit (WTC) Elements

Element Amount

You’re a couple applying together

Up to £1,990 a year

You’re a single parent Up to £1,990 a year

You work at least 30 hours week Up to £800 a year

You have a disability Up to £2,935 a year

You have a severe disability Up to £1,255 a year (on top of the disability payment)

You pay for approved childcare Up to £122.50 (1 child) or £210 (2 or more children) a week

Child Tax Credit (CTC)

You could get Child Tax Credit for each child you’re responsible for it they are under 16 or under 20 and in approved education or training. You don’t need to be working to claim CTC and you get money for each child that qualifies. CTC won’t affect your Child Benefit but only one household can get Child Tax Credit for a child. Again, you could get a basic amount and elements on top of this. How much you get depends on things like your income and circumstances (eg if your child is disabled). The basic amount is up to £545.00 a year. The list of elements for CTC are on the next slide…

Element Amount

For each child Up to £2,750

For each disabled child Up to £3,100 (on top of the child element)

For each severely disabled child Up to £1,255 (on top of the child element and the disabled child element)

Child Tax Credit (CTC) Elements

Child Tax Credits when your Child Reaches 16

Child Tax Credits usually stop on 31 August after your child turns 16 but can continue for children under 20 in approved education or training registered with a careers service. Approved education must be approved and full-time.

Approved training should be unpaid.

Your child must be accepted on the course before they turn 19.

Approved Education must be full-time (more than an average of 12 hours a week supervised study or course-related work experience) and can include:

•A levels or similar, eg Pre-U, or the International Baccalaureate•Scottish Highers•NVQ up to level 3

Courses are not approved if they’re:

•provided by the child’s employer or as part of a role they hold - eg part of their role as a scout leader•an advanced course - eg a BTEC Higher National Certificate or Diploma, a higher education course like a university degree

What Counts As Approved education ?

What Counts as Approved training

Approved training should be unpaid and can include:

•traineeships•some apprenticeships•Training for Success: Professional and Technical Training•Pathways for Success: Pathways for Young People•Get Ready for Work - if started before 1 April 2013•Skillbuild+ or Skillbuild - if started before 1 August 2011•Employability Fund programmes - Scotland only•Collaboration and Innovation Programme - Northern Ireland only

Courses that are part of a job contract are not approved.

Childcare and Tax Credits

You could get extra tax credits to help pay for some of your childcare costs whilst working. You can get up to £122.50 a week for 1 child or up to £210.00 a week for 2 + children. If you get childcare vouchers from your employer the amount of tax credits can go down. Use the childcare voucher calculator to see how childcare vouchers can affect your tax credits.

The calculator can be found athttps://www.gov.uk/tax-credits-calculator

How to Claim Tax CreditsYou can apply for tax credits as a single person or as a couple know as a ‘Joint Claim’. When you claim you will need your NI number, your income for the last tax year, details of any benefits you get, details of any childcare payments and the number of hours you work a week.

What counts as income?Income includes pay – your earnings before tax and National Insurance, benefits from your employer, certain state benefits, money from a pension – including your state pension, interest on savings, your partner’s income – if making a joint clam. Income also includes money from UK state benefits or their foreign equivalents, unless they are tax-free benefits.

How to Renew Tax Credits

You usually need to renew tax credits once a year. You should have your renewal pack by 30 June. The renewal deadline is 31 July unless stated otherwise. If you miss the deadline your tax credit payments will stop. You can renew online, by post or phone.

Changes in circumstance can affect your Tax Credit such as a salary increase or decrease, having a child or if the cost of childcare increases or decreases. You must notify the tax office of any changes immediately.

How Tax Credits and other benefits affect each otherChild benefits aren’t affected by Tax Credits but other benefits are, such as housing benefits, income support, income-based JSA, income-related employment and support allowance, pension credit. If you get tax credits you may also be eligible for help with • Prescriptions and other health-related costs• Vitamins, milk and food if you’re pregnant or have a child under 4• Maternity costs – you may get a £500.00 payment called a sure start maternity

grant • School costs including meals, uniform, transport and trips, • Funeral costs• Court fees• Home repairs • Heating and energy costs.

All information has been taken from the HMRC website where you can find further detail about Tax Credits.

We hope this information has helped you further understand Tax Credits.

For all accounting needs please feel free to contact us Green & Peter

Call: 020 8446 8100Email: enquiries@greenandpeter.co.ukPost: Green & Peter

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