Can you claim Child and Working Tax Credits?
First a few facts about Child and Working Tax Credits:
• They have nothing whatsoever to do with tax.
• They are not universally available, as Child Benefit currently is.
• You need make a claim, and that claim must be renewed every year.
• You can receive either or both Tax Credits if you are self-employed.
Working Tax Credit is extra income paid to a working person. It may include an amount to reimburse up to 80% of the cost of childcare, but you can claim this tax credit even if you don’t have children.
Child Tax Credit is paid to families with one or more children aged under 16. It is paid to the person who mainly cares for the children.
How to claim
Although Child Tax Credit and Working Tax Credit are separate benefits, there is just one claim form for both. To claim you need ring the Tax Credits Office on 0845 300 3900 at anytime from 8am to 8pm (except the Christmas and New Year holidays), quote your National Insurance number and they will send you a claim form. This must be completed and returned to the Tax Credits Office by post, but you don’t have to include any evidence of your income such as wage slips, accounts or contracts.
If you live with someone as part of a couple you must make a joint claim for tax credits, which means you must include your income and your partner’s income on the claim form. You don’t have to be married or in a civil partnership to be counted as a couple, but if you married are you MUST claim jointly unless you are actually separated. A couple can be two people of the same sex.
Once you are receiving tax credits you need to inform the Tax Credits Office within one month of the day you split with your partner so you no longer live together. There are special rules for people serving in the Armed Forces or who work overseas for the Government.
You can qualify for the Working Tax Credit you are single, aged 25 or more and work at least 30 hours per week. However, if you are disabled, or you are responsible for one or more children, you can qualify for Working Tax Credit from the age of 16 when you work at least 16 hours per week. This 16 hours threshold also applies if you are aged 50 or more, and are returning to work after an absence of six months of more.
You need to be honest about your personal circumstances when you make a single-person claim, and you must tell the Tax Credit Office within a month of the date you start living with a partner. This change in relationship (from single to couple), makes your single-person claim invalid. Any amounts claimed under an invalid claim will have to be repaid, and you may be prosecuted if you try to cheat the system by denying you are part of a couple.
Your working hours can be made up from more than one job, so the hours devoted to a part-time job and a self-employment can both be included. However, the work must be paid work, unpaid volunteering doesn’t count for the Working Tax Credit claim.
When to claim
The amount of tax credit you receive is based on your family’s net income (your income plus your partner’s) averaged over the whole of the tax year, but your claim can only be back-dated up to three months. Say you lose your job on 10 August 2010, and your family’s average weekly income drops, so you become entitled to tax credits. Your claim can only be back-dated to 11 May 2010, but if you had claimed tax credits for 2010/11 by 5 July 2010, the claim would be adjusted back to 6 April 2010. If you think your family’s income may drop suddenly you should submit a protective claim for tax credits, which can then be amended if the worst happens.
Is it worth it?
The tax credit rules are very complicated, so it is difficult to judge what level of tax credits you may receive. The easiest way find out if you could qualify is to use an online benefits calculator such as: Turn2us.
This is only a brief introduction to tax credits. There is much more information on the HMRC website, and produced by charities such as the Low Incomes Tax Reform Group.
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By TWD Accountants. September 20, 2010.
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