Call us now: 0121-550-8525
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
3 Lyttleton Court, Birmingham Street, Halesowen, Birmingham, B63 3HN

Tax Credits

Tax Credits provide state support to people with children and workers on low incomes. The credits are paid to those who claim them, and are not an adjustment in the tax computation.

Working Tax Credit (WTC) is paid to employed and selfemployed people on low incomes. The full entitlement is given for an income of only £6,420, and it is tapered away as a couple’s joint income increases above that.

Child Tax Credit (CTC) is paid to the main carer for children up to 16 years old, or up to 18 in full-time education. Entitlement is built up of elements for each child (£2,720), and for the family (£545). CTC is tapered away at 41p for every £1 by which the couple’s combined income exceeds £15,910. CTC of £5,985 (2 children plus family) will have tapered away completely when income has reached £30,510.

Tax Credit claims are made provisionally for the coming year based on a previous year’s income (2012/13 for 2013/14 claims), and may be revised up or down at the end of the year if income has changed significantly. However, increases in income will be disregarded if they are up to £5,000.

The Tax Credits system is very complicated. The HMRC website has details of how to apply at

CTC is separate from and additional to Child Benefit, which is paid at £20.30pw for the first child and £13.40pw for additional children. From 7 January 2013 Child Benefit paid to the family is clawed back from the highest earner in the family at the rate of 1% for every £100 of adjusted net income over £50,000. Where income exceeds £60,000 for the tax year, 100% of the child benefit is clawed back through the tax system. The family may elect not to receive the benefit to avoid this tax charge.

Universal Credit is a new state benefit destined to gradually replace Tax Credits and several other benefits, including housing benefit, from October 2013 onwards. The migration from the existing Tax Credit system to Universal Credit will not be fully complete until the end of 2017.

AddThis Social Bookmark Button
icaewlogo  Chartered Tax Advisers2bacslogo certifiedquickbookslogo fsblogo sagelogo

Directors:  Paul Cutter FCA | Kate Jones FCCA, ACA | Dave Hazlehurst FCCA, CTA

Registered Office:

3 Lyttleton Court | Birmingham Street | Halesowen | West Midlands | B63 3HN

Site Map | Client Portal Login

A Member firm of the institute of Chartered Accountants in England and Wales

Registered with The Chartered Institute of Taxation as a firm of Chartered Tax Advisers

 Company Number: 07252989

Terms Of Use | Privacy & Cookie Policy