Tax credits are being replaced by Universal Credit. You may still be able to claim tax credits in certain circumstances, but most people will need to claim Universal Credit instead.
The Department for Work and Pensions (DWP) plans to move all existing tax credit claimants onto Universal Credit by the end of 2024.
What is working tax credit?
You can only claim for working tax credit if you:
- Already receive child tax credit
- Have claimed working tax credit in the past year
Otherwise, you’ll need to claim Universal Credit.
Working tax credit is a means-tested government payment to help with day-to-day expenses for working people on low incomes.
If you work a certain number of hours a week, and have an income below a certain level, you could get up to £2,070 in 2022-23 in working tax credit.
This figure is called the ‘basic element’ of working tax credit. This is the part that everyone claiming working tax credit receives, and it's based on how much you earn.
You'll also receive an extra £650 in two instalments over the year as part of the government's measures to tackle the cost of living crisis.
There are a number of extra elements that you might also be able to claim, but they depend on your circumstances. We’ll explain what the extra elements are, and who they apply to, later.
You can get working tax credit whether you're employed or self-employed – you just need to be working in some way.
Who's eligible for working tax credit?
If you’re claiming benefits for the first time, you’ll need to apply for Universal Credit, not working tax credit.
People who are already claiming working tax credit or child tax credit may still be able to apply.
If you're in this situation, you'll need to apply to HMRC to find out if you're eligible. But if the following circumstances apply to you, you might be able to claim working tax credit.
If you're single and don't have children you must:
- work at least 30 hours a week
- be 25 or older.
If you're in a couple and don't have children you must:
- work at least 30 hours a week
- be 25 or older.
However, if you're disabled and work, or if you have children, you might be eligible for working tax credit if:
- you're 16 and over
- you work at least 16 hours a week.
You also need to be a UK resident to claim, but there are a few circumstances where you can receive working tax credit without living in the UK:
- 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 contribution-based Jobseeker’s Allowance (JSA).
If you’re part of a couple – ie married to, in a civil partnership with, or living with a partner – you must claim tax benefits jointly. You can't opt to claim on your own.
The table below shows the different working tax credit elements and how much each element is worth in 2022-23.
To find out the maximum amount you might be paid, you can add up all of the elements that apply to you. You can also see rates for previous tax years by clicking on the dropdown menu and changing the year.
|Basic payment||£2,070 a year|
|A couple applying together||Up to £2,125 a year|
|A single parent||Up to £2,125 a year|
|Work at least 30 hours a week||Up to £860 a year|
|Disability||Up to £3,345 a year|
|Severe disability||Up to £1,445 a year|
|Approved childcare||Up to £175 a week for one child; up to £300 a week for two or more children|
Depending on how much you earn, this amount may be reduced. We explain how and why your tax credits may be reduced in our section on income thresholds.
Our guide how to calculate tax credits can also give more information on how to figure out what you'll get.
Working tax credit: how much will you get?
Working tax credit is made up of a number of different 'elements' or payments. You may be eligible for just one element or for a few different elements, depending on your family circumstances.
Everyone who qualifies for working tax credit receives the basic element. This is worth up to £2,070 during 2022-23, depending on your income.
In addition, you can receive extra elements depending on your circumstances, as we've shown in our table above.
The elements you are entitled to are added together. But HMRC reduces the amount you get the higher your income is.
There are income thresholds in place which mean that those on higher incomes will receive a reduced amount of working tax credit.
The amount of working tax credit you receive will start to be reduced if you earn more than £6,770 a year.
For every £1 of income over this threshold you earn per year, the amount of tax credit paid decreases by 41p.
So, if your salary is £8,000 a year, you’ll be earning £1,230 over this threshold.
For each pound, your working tax credit will be reduced by 41p – which can be worked out as 1,230 x 0.41 = 504.30.
This means that the maximum amount of working tax credit would be reduced by £504.30 over the year.
What counts as income?
When applying for tax credit, or renewing your tax credit, there are some types of income you have to report – no matter how much you earn. These are:
- 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. If you claim alone, you can still earn up to £300 without declaring these sources of income.
- income earned on your savings, before tax
- investments, such as company dividends
- income from property
- income from trusts, settlements and estates
- foreign income.
How are working tax credit and child tax credit linked?
It's possible to claim working tax credit and child tax credit at the same time. If you qualify for working tax credit and are responsible for one or more children, you'll probably be able to claim child tax credit, too.
When you apply for working tax credit, you'll be told if you can apply for child tax credit – you don't have to apply for them separately.
If you have children, there are extra working tax credit elements you may be able to claim, such as:
- the childcare element of working tax credit, if you are paying for childcare
- the single parents' element of working tax credit, if you are raising your child by yourself.
Childcare element of working tax credit
The childcare element of working tax credit is an extra allowance to help working parents who spend money on approved childcare.
Approved childcare includes:
- a registered childminder, nursery or play-scheme
- an out-of-hours club on school premises run by a school or local authority
- a childcare scheme run by an approved provider.
With the childcare element of working tax credit, you can claim up to 70% of childcare costs to a maximum of £175 a week for one child, or £300 a week for two or more children.
- Find out more: tax-free childcare and other ways to save – our guide outlines your childcare options.
Renewing your tax credit
You’ll usually have to renew your tax credit every year. You’ll receive a renewal pack 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. Failure to do so could mean you’ll have to repay any overpayments you receive and, if HMRC thinks you purposely gave the wrong information in order to get more money, you could be fined up to £3,000.
Since the government intends to end working tax credit, you will be switched to Universal Credit at some point. You may receive a larger payment at first due to a ‘transitional element’.
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 could change how much you’re entitled to receive from tax credits.
Some changes must be reported within one month of them 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: tax credits and changes in circumstances - read the full list of the important changes you must update HMRC about.
If you claim Universal Credit
Universal Credit will eventually replace working tax credit and child tax credit, plus several other means-tested benefits.
It’s being rolled out gradually. You may already have been moved onto Universal Credit, or will be moved onto it soon.
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?
Working tax credit: your questions answered
We've answered some of the most common questions you might have about working tax credit below.
What is 'working tax credit run on'?
You may receive a working tax credit run on if you stop work, get laid off, or your hours drop below the threshold to qualify.
'Run on' is where you continue to receive the tax credit payments for four weeks after the change.
If your hours increase, or you get a new job within this time, call the Tax Credit Office to let them know.
Is working tax credit backdated?
Tax credit can usually be backdated by up to a month. That’s why, if your circumstances change – for example, you start working fewer hours – 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 credits and change in circumstances
When is working tax credit paid?
You can choose to either get paid once a week, or once every four weeks. You can specify which you'd prefer on the claim form.
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.
Does working tax credit affect other benefits?
Tax credit can affect other benefits. If you claim tax credit, you might find that you get less:
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Pension Credit.
However, claiming tax credit might mean you get extra help with certain other costs, such as:
- prescriptions and other health-related costs
- if you’re pregnant or have a child under 4, you could get help towards the cost of vitamins, milk and food
- school-related costs, such as school meals, uniforms, transport and trips
- funeral costs
- court fees, legal costs and prison visits
- home repairs from your council
- the costs for heat and energy in your home.
Will I get working tax credit while I’m on maternity leave?
Yes, you can get working tax credit for periods when you don’t work, and that includes while you’re on maternity leave, off sick or in-between jobs.
You can get working tax credit for the first 39 weeks of your maternity leave. To qualify you must have been in paid work and have worked the qualifying number of hours before you go on leave.