What is child tax credit?
Child tax credit is a means-tested benefit that can top up your income if you are responsible for at least one child or young person. You don't have to be working to claim.
Child tax credit is made up of a number of different payments called 'elements'. How much you can get depends on your income, the number of children you have, and whether any of your children are disabled.
To get the maximum amount of child tax credit, your annual income will need to be less than £16,105 in the 2019-20 tax year. This was the same in 2018-19.
If you earn more than this, the amount of child tax credit you get reduces.
Child tax credit is gradually being replaced by Universal Credit, so not everyone will be able to claim it.
How does child tax credit work?
Child tax credit will be paid until the September following your child's 16th birthday. So, for example, if your child's 16th birthday was 1 June 2019, your child tax credit would stop on 1 September 2019.
The only way to continue to get child tax credits after this point is if your child is aged between 16-20 and is in full-time education or in approved training, and they don’t get paid for it.
You can also claim child tax credit for 16 to 17-year-olds who aren’t in further education or training if they don't have a job of 24 hours a week or more and have registered with their local careers service or Connexions service.
But you can't claim if the young person is claiming income support, incapacity benefit, employment support allowance or tax credits in their own right.
Child tax credit: are you eligible?
You don’t need to be working to claim child tax credit – instead, you must be responsible for at least one child or qualifying young person. You don’t have to be the child’s parent, but must be considered as their main carer.
However, if you are working, you may be able to claim working tax credit at the same time as child tax credit. Check our working tax credit guide to see if you could be eligible to claim both.
You also usually need to have a right to reside in the UK and live in the UK to claim, but there are a few circumstances where you can receive child tax credits and live abroad:
- you’re a citizen of a country in a European Economic Area (EEA) and you work in the UK
- you’re a Crown Servant and have been posted overseas
- you’re a citizen of an EEA country living abroad and you receive a UK state pension and/or contributions-based Jobseeker’s Allowance (JSA).
How much is child tax credit in 2019-20?
Tax credit is made up of a number of different 'elements' or payments.
You may be eligible for just the family element and child element or for a few different elements, depending on your family circumstances.
The table below shows the different child tax credit elements and the maximum amount each element is worth in the 2019-20 tax year. You can also select the 2018-19 tab to see last year's rates.
|Child tax credit elements||Maximum amount paid|
|Family element - the basic element for families with one or more children||£545|
|Child element - one for each child or young person||£2,780|
|Disability element - one for each child your are responsible for with |
a registered disability
|Severe disability element - one for each child you are responsible |
for who receives the Highest Rate Care Component
of Disability Living Allowance
How is child tax credit calculated?
When you put in your child tax credit claim, the Tax Credit Office will first work out the maximum amount of tax credit you are eligible for, based on how many children you have, and if your child has any disabilities.
They will then look to see if any of your tax credit award needs to be reduced because of your income. The higher your income, the less tax credit you are likely to get.
The tables below show how much child tax credit you might be able to receive according to your household income and how many children you have.
Both tables assume you aren't eligible for working tax credit and your children aren't disabled. Disabled children are also eligible for the disability element.
Find out more: How to calculate tax credit – find out how much you could claim.
What is the two-child limit?
The two-child limit, which came into force on 6 April 2017, means you’ll only receive the child element of child tax credit for up to two children.
It applies to anyone with more than two children who are or were born after this date – the child element will continue to be paid for all children born before 6 April 2017.
If you were to have three or more children after 6 April 2017, you’d receive tax credit payments as if you only had two – you will not get an additional amount of tax credit for additional children.
This change has caused quite a lot of controversy, but at the moment it remains in place.
Even if you know the child element won’t be payable for your child, you should still make sure there is a new child living with you to HMRC to make sure you don’t miss out on any related payments, such as the childcare element of working tax credit or the disability element of child tax credit.
Two child limit exceptions
There are a number of exceptions where you may be responsible for more than two children born after 6 April 2017 and receive child tax credit for all of them. The rules don’t apply if:
- you have multiple births – ie twins or triplets, which take you over the two child limit
- you look after the child as a 'friend or family carer'
- you have adopted the child (unless you were a parent or step-parent of the child prior to adoption)
- a child you have been claiming for has a child of their own
- the child was born as a result of non-consensual conception.
In the last instance, you'll need to fill in a non-consensual conception form with the help of your doctor, social worker, or a specialist rape charity. If you've been affected by sexual assault and want to talk to someone, you can get support from Women's Aid, Victim Support or Rape Crisis.
Child tax credit income thresholds
The income threshold for receiving the maximum amount of working tax credit is £16,105.
For every £1 of income over this threshold you earn per year, the amount of tax credit you'll be paid decreases by 41p.
Child tax credit reductions example
For example, if you received the family element and child element of child tax credit and earned £16,000 a year, you'd get the full £3,325 (£545 + £2,780).
If your income went up by £2,000 to £18,000, the amount of tax credit you could earn would reduce by:
- 41p for every £1 over £16,105 you earn
- £18,000 is £1,895 over the threshold
- £1,895 x 0.41 (or 41p) is £776.95.
The total amount of child tax credit you would get is £2,548.05 (£3,325 - £776.95)
What counts as income?
When applying for tax credits, or renewing your tax credits, there are some types of income you have to report – no matter how much you earn.
- money earned through employment and self-employment
- taxable social security benefits
- student dependent grant
- miscellaneous income, such as a business start-up allowance.
Other income sources only have to be reported if you earn more than £300 a year from them. Note that if you’re claiming as part of a couple, this £300 threshold is shared between both of you.
- income earned on your savings, before tax
- investments, such as company dividends
- income from property
- income from trusts, settlements and estates
- foreign income.
Child tax credit and working tax credit
If you qualify for child tax credit and you’re in work, you might also be able to claim working tax credit at the same time. When you apply for child tax credit, you'll also be told if you can apply for working tax credit. You don't have to apply for them separately.
Like child tax credit, working tax credit is also made up of several different elements that you might be eligible for depending on your circumstances.
For those with children, the childcare element of working tax credit may be particularly useful. This payment helps with the expenses of having someone looking after your child while you’re at work.
Our guide on how to calculate your tax credit can help give you an idea of how much you might be able to claim. Bear in mind that it’s very complicated, and HMRC are best-placed to tell you exactly what you’re eligible to get.
- Find out more: Working tax credit explained – find out more about this tax credit, including a table with an illustrative example of what you might be able to get if you are eligible for both child and working tax credit.
Renewing your tax credit
You’ll usually have to renew your tax credit every year. You’ll receive a renewal pack in the post between April and June, and you’ll have to either fill out and return the form, or call the Tax Credit Office, by 31 July.
You must make sure all of your information is correct and up to date. Failing to do so could mean you’ll have to repay any overpayments you receive as a result of HMRC having the wrong information about you. Plus, if they think you purposely gave the wrong information in order to get more money, you could be fined up to £3,000.
- Find out more: Renew your tax credits – our guide explains how to do it.
Reporting changes to your circumstances
It's important to keep HMRC up to date with changes to your income or family circumstances, as some things – such as having a new baby, you and your partner getting divorced, or you child moving out – could change how much you’re entitled to.
Some changes must be reported within one month of taking place. Failing to do so could end up with you receiving an overpayment that you’ll have to pay back later, and if HMRC thinks you’ve failed to fulfil your responsibilities you could be fined up to £300.
- Find out more: Our guide to tax credit and changes in circumstance explains the important changes you must tell HMRC about
If you claim Universal Credit
Universal Credit is the new government benefits model that will eventually replace working tax credit and child tax credit – plus several other means-tested benefits.
It’s being rolled out gradually across the country, so you may already have been moved onto Universal Credit, or will be moved onto it soon. When it happens depends on where you live.
If you already receive Universal Credit, you can’t apply for working tax credit, as the payments you’d receive are included in your Universal Credit payment.
Find out more: What is Universal Credit?
Child tax credit: your questions answered
We answer some of the most common questions about child tax credit and how it works.
Is child tax credit different from child benefit?
Yes, child benefit and child tax credit are different payments, and you can claim both at the same time.
Both are government payments are paid to those who are responsible for children. While child tax credit now has a two-child maximum for children who are born after 6 April 2017, with child benefit you can continue to get additional payments for multiple children.
Child benefit isn’t means-tested, so anyone can claim it no matter how much they earn (although if you or your partner earns more than £50,000 a year, you will have to pay the ‘high-income child benefit charge’ – read our full child benefit guide for more information).
Find out more: Child benefit
Is child tax credit backdated?
Tax credit can usually be backdated by up to a month. That’s why, if your circumstances change – for example, you have a new baby – it’s important to tell HMRC within a month of it happening. That way, if you’re eligible to get paid more, you won’t miss out.
If the change means you’ll get paid less, but you don’t tell HMRC, they’ll make you pay back any extra money you’ve been given, which could leave you out of pocket. So, again, it’s best to tell HMRC as quickly as possible.
Find out more: Tax credit and changes in circumstance
Is child tax credit affected by savings?
Child tax credit payments do not take your savings into account, and there is no limit on how much savings you can have.
Instead, the amount of tax credit you get is usually just based on your – and your partner's, if you have one – annual taxable income and how many children you have.
Who gets child tax credit when parents are divorced or separated?
Child tax credit can't be split between parents, and will be paid to the parent who is considered to have the main responsibility for the child. Usually this will be the parent the child lives with for most of the time.
This can be decided by the parents themselves during the divorce or separation. Otherwise HMRC will decide.
Does carer’s allowance affect child tax credit?
Claiming carer’s allowance can mean that other benefits you receive are reduced, but HMRC says your overall benefit payments will usually increase or stay the same.
You should contact the Tax Credit Office to tell them if you are making a carer’s allowance claim.
When is child tax credit paid?
You can choose to either get paid once a week, or once every four weeks – the option for when your payments are made is on the claim form you fill out.
It can take up to five weeks to process a new claim, so you may have to wait a while. You’ll be sent an award notice in the post to tell you when your first payment will be made.
You might get paid slightly earlier whenever there’s a bank holiday, or some local holidays in Scotland. HMRC has a list of all early payments on its website.