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How To Top Up Your Income with Working Tax Credits

By IntFormalities
Updated on November 20, 2023
Estimated reading time: 5 minutes

As a driver to help people with low income, the benefits system known as the Working Tax Credit was introduced by the UK government in 2003. Working Tax Credits supplement and tops up the income people earn. However, this benefit has already been replaced by Universal Credit. This means that it is only currently available to people claiming Child Tax Credit. If this is your situation and you are in receipt of the Child Tax Credit, continue reading to see if you can take advantage of the incentives offered by the Working Tax Credit.

What Are Working Tax Credits?
Working Tax Credits is a benefit only currently available to people already claiming Child Tax Credit

What Are Working Tax Credits?

Working Tax Credit was designed to encourage individuals to move away from relying solely on benefits and to get people into the employment system. Primarily aimed at low-income people, it tops up the income people earn.

Who Is Eligible for Working Tax Credits?

In addition to receiving Child Tax Credit, to claim Working Tax Credit, a person must be at least 25 years of age and work a certain number of hours. The table below outlines the number of hours a person needs to work based on age and their particular scenario:

ScenarioNo. Of Hours A Person Needs To Work
Age 25 to 59 A minimum of 30 hours.
Age 60 or more A minimum of 16 hours.
A single person with At least 1 childA minimum of 16 hours.
A couple with at least 1 childA minimum of 24 hours between the two people and 1 person must work at least 16 hours.
Disabled Must work a minimum of 16 hours.

A child is classified as a person under the age of 16 or below the age of 20 if in training or education.

Rule Differences For Couples

Different rules apply for couples with at least 1 child in the following scenarios. One person from a couple can work 16 hours instead of the total 24 hours per week if:

Work and Self Employment

To qualify, a person can be employed, self-employed, or a mixture. Being an employee is straightforward, the employee pay records are used to calculate the salary and the hours worked. Self-employment, however, has a stricter requirement.

Self-Employment Guidelines

Not all self-employed people qualify for Working Tax Credit. For eligibility, the self-employed person must strive to profit, and the venture must be regular. It is necessary to maintain records such as invoices and receipts and follow the required rules and regulations of their chosen industry.

What You’ll Receive

Anyone who qualifies for Working Tax Credit is entitled to a basic amount of up to £2,125 for the 2022/23 tax year. There is an addition called ‘elements‘ on top of the basic amount. The amount depends on individual circumstances, but the table below provides a guide as to what a person or a couple may receive:

Element Payment Amount
An individual working a minimum of 30 hours per week £860 per year.
A single parent A maximum of £2,125 per year.
A couple making a maximum of £2,125 per year.joint claimA maximum of £2,125 per year.
A person with a disability A maximum of £3,345 per year.
A person with a severe disability A maximum of £1,445 per year (in addition to the disability payment of £3,345).
Approved childcare costs A maximum of £122.50 for 1 child or £210 for 2 or more children per week.

You can use the calculator here to gain an idea of what you may receive.

How Are Working Tax Credits Payments Made?

Money is paid directly into your bank account. You can expect to receive payment weekly or every 4 weeks from the date of the claim.

How To Make a Claim for Working Tax Credits?

Since the Working Tax Credit claims can only be made by those receiving Child Tax Credit (ctax), to make an application, a person needs to report a change in circumstances to their existing tax credit situation. It can be done online through the UK government website, where you’ll need to log in to your account.

For further help and assistance, you can contact His Majesty’s Revenue and Customs (HMRC) tax credit helpline. Their contact number is 0345 300 3900.

Unemployment and Working Tax Credits

If you lose your job, you’ll receive Working Tax Credit for 4 weeks before the payments are stopped. You can continue to receive Working Tax Credit when on maternity, paternity, or adoption leave. People can still receive Working Tax Credits when off work through illness but need to receive sick pay from the employer.

Financial Help To Get Back to Full Employment

We hope this article has given you a greater understanding of the Working Tax Credit scheme. Working Tax Credit is a lifesaver for many on a low income. In 2024, it will become absorbed by the Universal Credit system. All claimants will move on to Universal Credit. In the meantime, if eligible, do take advantage of the tax credit scheme to maximize your income.

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