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What are tax credits?

Find out what tax credits are and how much you're likely to get, depending on your circumstances. 

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What is a tax credit? Tax credits: How much will I get?

What is a 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 of this guide. 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.

NOTE: Existing tax credits claimants will be moved to Universal Credit in July 2019. You may be able to claim Universal Credit earlier, depending on your area.

Tax credits: How much will I 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 in 2018-19 for the first time will use their current family circumstances, but based on the income they received between 6 April 2017 and 6 April 2018.

If your income has fallen since last year, you can ask Her Majesty's Revenue and Customs (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.

Child tax credits

The amount of child tax credits you get is dependent on your household income, how many children are living with you and how much money you spend on childcare. You may be entitled to more child tax credits if your child is disabled. You don't need to be working to claim child tax credit. 

See our guide on child tax credits for more information. 

Working tax credits

If you don't have children, you may be eligible for working tax credits depending on your household income and how many hours you work. If you have children, you'll be entitled to the childcare element of working tax credit as well. If you're a disabled worker you may qualify for the disability element working tax credit. 

See our guide on working tax credits for more information.