Tax credits for Parents

Childcare costs rose by an astronomical 19% between 2013 and 2014!

But there are two types of Tax Credits available for parents on low incomes, calculated depending on your income, your circumstances and how many children you have

Child Tax Credits could provide £3,325 a year for your first child and the childcare element of Working Tax Credits could give up to £122.50 a week to help with childcare costs for your first child

 

Need to know

  • There are two main types of Tax Credits available to parents - Child Tax Credits and extra Working Tax Credits to help with Childcare
  • How much you can get depends on- your income, combined with your partner's income if applicable, how many children you have, if there are any disabilities in your household and what your childcare costs are
  • These are paid as well as Child Benefit. However if you buy Childcare Vouchers this could reduce the amount of Tax Credits you can get. Have a look at Gov.uk's Childcare calculator to see which you would be better off taking 
  • Childcare: you can claim as soon as you have childcare costs up to the age of 15. The childcare needs to come from an  Ofsted approved provider. You can find out if your childminder or After School Club is Ofsted approved by calling 0300 123 1231
  • A really good way to find out what you are eligible for is to use Gov.uk's benefits calculator and there are also entitlement tables on the  Gov.uk website. HOWEVER the only way to get a definitive answer is to actually make a claim
  • You can call Gov.uk's helpline on 0300 200 3300 for more guidance
  • You can only back date your claim by a month so DO make your claim swiftly
  • The payments are made into your bank account either once a week or once every four weeks and only one household can get tax credits for each individual child
  • Be honest and careful when applying for credits, as you will have to REPAY any money paid to you in error
 

Child Tax Credits

  • You can claim these from your child’s birth until they are 16 (or 20 - if they are in certain types of education or training)
  • You do not have to be working to claim this benefit
  • As a rough guide you can claim if you have one child and your joint salary is under £26,000. The threshold raises if you have more children, you should be able to claim if you have two children and your salary is under £32,200
  • The amount you recieve depends on your income- if your joint income is under £26,000 a year you would recieve up to £2780 for each child.
  • Child Tax Credits are included in the Benefits Cap, which caps benefits for parents with dependant children at £500 a week
 

Child Tax Credit Changes

From April 2017 there will be changes to Child Tax Credits

  • If you are claiming for the first time, Child Tax Credits will be limited to the first two children (unless you have a multiple birth) and the family element will no longer be claimable. 
  • Disabled children are protected so you will still be able to claim if your child is eligible
  • If you are already claiming Child Tax Credits prior to April 2017 and you have more than two children, you won't be affected by these changes
 

Working Tax Credit

  • Working Tax Credits are not just for parents, the basic amount is up to £1,960 a year and 'elements' such as childcare can add more money on top
  • Both employed and self-employed can claim, you need to be over 16 if you have children or over 25 if you don't
  • You and your partner both need to be working 16 hours a week paying for approved childcare to qualify for the childcare element
  • The childcare element is up to £122 (1 child) or £210 (2 or more children) a week
  • The amount you recieve depends on your income and your circumstances. As an idea if your household income is £20,000 you'll be awarded £2,545 a year for one child and £5,330 for two children. BUT there are so many variables you should use the tax credit calculator to see if you qualify
  • You can recieve these alongside Child Tax Credits if you are eligible

  • You will be exempt from the Benefits Cap if anyone in your household qualifies for Working Tax Credit
 

Universal Credit

Benefits can be VERY complicated. Universal Credit is being rolled out across the country over the next 4 years and will combine the following into one (hopefully) simple payment:

  • Child Tax Credit
  • Working Tax Credits
  • Housing Benefit
  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-based Employment and Support Allowance

Universal credits will be applied for and managed online but you don’t have to do anything until your tax credit officer tells you

 

Changes to Tax Credits

These changes are intended for April 2016 however they may be stalled due to a recent proposal by the House of Lords

  • Firstly the maximum income you must be earning to gain full Working Tax Credits will be £3,850 where previously it was £6,420. 
  • The income threshold for people who only claim Child Tax Credits will be reduced from £16,105 to £12,125
  • After April, for every £1 over the thresholds a person earns, they will lose 48p of their tax credits. This is a change from 41p.
  • There will also be similar changes if you claim work allowances as a part of Universal Credit
  • The Institution for Fiscal Studies have said that as a result of these cuts 3 million families will likely lose an average of £1000 a year with single parent families being the most effected by the changes.
  • However, the introduction of the National Living Wage will raise the income for many families when it is introduced and this is the reasoning behind the cuts. Whilst this may be a good thing, a raise in income means a decrease in Tax Credits.
 

Make a claim

To register you need to call the Tax Credit helpline on 0345 300 3900 (0345 300 3909 for deaf, speech or hearing impaired)

April- September is the 'Red Period' for the helpline and you may have to wait up to 10 minutes, so try calling early in the day or at 3pm during the school rush

After getting through the automated voice system the advisor will take you through a quick eligibilty check if you haven't already done one (the benefits calculator) and then send you a pack

The form will take a maximum of 2 weeks to arrive and shouldn't take you more than 20 minutes to fill out

You will need the following to hand when filling out the form:

  • You and your patners income and employment details
  • Your national Insurance numbers
  • Details of any benefits you recieve
  • Details of childcare costs
  • Details of any disabilities in your household

GOV.UK


Why we like it:

  • very clear guides to credits and claiming
  • benefits calculators will help you work out what you could get and what your best options are
  • HMRC website has now merged with this one

Watch out:

  • Very wordy

The inside track

  • Sooner is always better than later. If you wait to apply for benefits you may miss out on payments
  • Child Benefit and Tax Credits become more complicated if you are fostering, living abroad or have only just moved to the UK, but you may still be eligible. Visit Gov.uk for more details
  • If you claim Tax Credits you will be sent a renewal pack between April and July, this will have details of your previous years payments which you will need to check as well as claiming for the next year. You MUST renew by the 31st JULY or you could end up missing out
 
 

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