Tax credits What are tax credits?

Parent with young child

If you have children you may be eligible for some tax credit

Tax credits are state benefits that provide extra money to people responsible for children, disabled workers and other workers on lower incomes.

There are two types of tax credits – child tax credits and working tax credits. You can find out more about each type of tax credit on the relevant page. You might be eligible for one or both of them, depending on your circumstances.

Tax credits are tax-free and you don't have to be paying National Insurance or tax to qualify, but they are means-tested. So, whether you qualify and how much you get depends on your household's income and circumstances.

How much tax credit will you get?

How much tax credit you get is initially based on your current circumstances and your income during the previous tax year. 

So, people applying now for the first time will use their current family circumstance but the income they received in between 6 April 2009 and 5 April 2010.

If your income has fallen since last year, you can ask HMRC to revise your award based on your estimated current year income. 

However, be careful not to overestimate the fall in your income otherwise you may be overpaid tax credits which you'll have to pay back at the end of the year.

If you have children

If you have children you may be eligible for some tax credits if your household income for tax credits purposes is less than £58,000 a year, or £66,000 if you have a child under the age of one.

If you don't have children

If you don't have children, you may be eligible if your income for tax credit purposes is around £13,000 or less if you are single or £18,000 if you are part of a couple and work at least 30 hours a week.

If you are a disabled worker or are over 50

If you are a disabled worker or are over 50 and returning to work after claiming benefits you might still qualify for working tax credit even if you earn more than this.

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